In the world of trading, support and resistance points are essential tools that help traders understand price action and determine ideal entry and exit points. These points are price levels at which strong buying or selling pressure is expected to appear that could change the price direction.

What are the support and resistance points?

  • A support point is the level at which the price is expected to slow its decline and start rising again.

  • The resistance point is the level where the price stops rising and starts falling.

How to profit from support and resistance points

  1. Pattern Recognition: Use charts to identify historical support and resistance points.

  2. Breakout Trading: Look for times when the price breaks through these points strongly, which could signal the start of a new trend.

  3. Bounce Trading: When the price bounces from a point of support or resistance, it may be an opportunity to enter a trade with the trend of the bounce.

  4. Placing Stop Loss Orders: Place stop loss orders near support and resistance points to reduce risk.

Technical tools to identify support and resistance points

  • Historical price analysis: Past charts show the levels at which the price has reversed.

  • Horizontal Lines: Used to draw lines at previous highs and lows.

  • Fibonacci indicator: used to identify price retracement points based on certain ratios.

Conclusion

Support and resistance points are powerful tools that can help you make profit from trading. By understanding how it works and applying appropriate trading strategies, you can improve your decisions and increase your chances of success in the markets.

I hope this article was useful to you. If you need further assistance or would like to expand any part of the article, please feel free to let me know.

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