The Simplest Trading Strategy: Mastering Support and Resistance
Trading doesn’t need to be as complex as it often seems. By focusing on straightforward strategies, traders can achieve significant results. One such approach involves understanding and utilizing horizontal support and resistance levels.
Understanding Horizontal Levels
To effectively trade any security, it’s essential to identify horizontal support and resistance levels—key areas where trading opportunities frequently arise. These levels are where prices often rebound or encounter obstacles, influencing key trading decisions.
Horizontal Support Level
A horizontal support level represents a price point where the market consistently struggles to drop below. When observing price movements, you’ll notice certain levels where prices fail to decrease further and instead reverse direction and rise. This level acts as a magnet for buyers, presenting an ideal opportunity to enter long positions.
For instance, consider a chart of gold prices where the price initially falls but then begins to rise. Despite attempts by sellers to push the price down further, they struggle to do so below a certain level—say, 117. The presence of buyers at this level who push prices back up highlights it as a crucial support level.
The initial arrow on the chart marks where support was established. Subsequent attempts by sellers to drive the price lower again fail around the 117 mark, reinforcing it as a significant support level.#BinanceHODLerBANANA #LowestCPI2021