Need to know about Support & Resistance

They are:
1. Support & Resistance
2. Role reversal
3. Dynamic Support & Resistance
4. Impulse & corrective moves

Support & Resistance
Support – An area on the chart with potential buying pressure to push the price
higher.
Resistance – An area on the chart with potential selling pressure to push the price
lower.

Here are a few examples:

support

resistance

*NOTE*:Support & Resistance is not a single line, but an area on the chart.
And when price breaks Support & Resistance, a role reversal occurs.

Role reversal
Simply put…
If the price breaks below support, previous support becomes resistance.
If the price breaks above resistance, previous resistance becomes support.
Here’s what I mean…

pstr

prtr

Now:
You’ve just learnt what Support & Resistance are, and their role reversal with one
another.
This is “static” Support & Resistance, where their areas are fixed on the chart.

Dynamic Support & Resistance
Support & Resistance can also move along with price, which is called Dynamic
Support & Resistance.
Dynamic support occurs in an uptrend, and dynamic resistance in a downtrend.
They can be identified using moving averages (I use 20 & 50 EMA).
This is what I mean…

ds

dr

You’re wondering is there anything special about 20 & 50 EMA?
The answer is no. I use it because it fits my trading style. Ultimately you need to find something that suits you.
Indicators are simply trading tools. It’s how you use them that make a difference.

Impulse & Corrective moves
Markets don’t move in one straight line. And this process contains impulse & corrective
moves.

Impulse move – “Longer leg” on the chart, which points towards the direction of the
trend. Candlestick size is usually larger, signaling momentum behind the move.
Corrective move – “Shorter” leg on the chart, which is against the current trend.
Candlestick size is usually smaller because of traders taking profits, without strong
pressure.
Here’s a few examples:

ic

ic1

Here’s a tip for you…
You can trade pullback on a corrective move, and breakout on the impulse move.
Depending on your trading style, both approaches let you get on board with the
trend.

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