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support and resistance questions

  • #1
  • First Post: Jan 21, 2010 11:06pm Jan 21, 2010 11:06pm
Hi, I just have a few questions about support and resistance. Why are there support and resistance levels? Why does price break these s/r levels sometimes and not the other? I just think that a good understanding of why these levels are established is important in forex trading.

I would appreciate any comments. Thank you.
  • #2
  • Jan 21, 2010 11:24pm Jan 21, 2010 11:24pm
Quoting santi81
Hi, I just have a few questions about support and resistance. Why are there support and resistance levels? Why does price break these s/r levels sometimes and not the other? I just think that a good understanding of why these levels are established is important in forex trading.

I would appreciate any comments. Thank you.
price movement occurs when the willing buyer and seller agree to a price that is above or below the current price. so for price to move downwards say from 1.00 to 0.90 all the buyers with orders at 0.99, 0.98, etc have to be filled, with more sell orders coming into the market to keep moving the price down.

at S/R levels you can view them in many ways,....

1) historic points of equilibrium of bids and offers.

2) technical traders all looking at similar places of previous lows, highs, consolidations in the past. then there are a build up of limit orders and stops around these areas.

3) basically any price at which there is a technical, psychological, or fundamental confluence for there to be a build up of orders can act as a S/R level. these levels also act as levels of uncertainty. sellers who have been short may take profit at these levels, counter trend traders or long term buyers may see the level as a discounted entry and start buying.
  • #3
  • Jan 22, 2010 12:17am Jan 22, 2010 12:17am
Quoting pursuit_21
price movement occurs when the willing buyer and seller agree to a price that is above or below the current price. so for price to move downwards say from 1.00 to 0.90 all the buyers with orders at 0.99, 0.98, etc have to be filled, with more sell orders coming into the market to keep moving the price down.

at S/R levels you can view them in many ways,....

1) historic points of equilibrium of bids and offers.

2) technical traders all looking at similar places of previous lows, highs, consolidations in the past. then there are a build up of...


Ehh,quite right and not exactly correct. I will only say it once and I hope you will remember it as you embark on your long and hard road to be a successful trader (hopefully) Out of every one who succeed, hundreds or even thousands will give up halfway.

There are S/R levels for :-

1. Pullback level
2. Retracement level
3. Trend change level (s/t, m/t, l/t)

You may not understand it now but I ask you to use this as a basis in your quest to master Forex and as long as you dont deviate from this basis, you will one day find the answer along with many, many many others. This alone will be enough for you to start off on the right footing. And as you become better in honing and managing the trades, you will become more efficient which equates to more profit and success in your tradings. You can chose whatever indicators for you to create a road map to align the above to the price actions so that it will enable you to follow the path of which the currency pairs will travel. We dont try to predict the PA, we merely try to follow it whereever and whenever it goes. Fibs will help you to determine those levels..

Wish you every success and GL to you.....Cheers
  • #4
  • Jan 22, 2010 12:44am Jan 22, 2010 12:44am
Quoting 99vt66
Ehh,quite right and not exactly correct. I will only say it once and I hope you will remember it as you embark on your long and hard road to be a successful trader (hopefully) Out of every one who succeed, hundreds or even thousands will give up halfway.

There are S/R...

thanks for the reply, will try to remember it along the "long hard road".

if i'm not wrong the TS is asking why PA acts the way it does--not trying to predict it, but the mechanics that cause price to consolidate, retrace, or change direction at certain levels.

i believe fibs have a good probability of determining those levels, but they don't necessarily cause those levels of S/R to occur, any more than other well subscribed technical indicators.
  • #5
  • Jan 22, 2010 5:06am Jan 22, 2010 5:06am
thank you for your replies, happy trading...
  • #6
  • Last Post: Jan 22, 2010 9:12am Jan 22, 2010 9:12am
Quote
Ehh,quite right and not exactly correct. I will only say it once and I hope you will remember it as you embark on your long and hard road to be a successful trader (hopefully) Out of every one who succeed, hundreds or even thousands will give up halfway.

There are S/R levels for :-

1. Pullback level
2. Retracement level
3. Trend change level (s/t, m/t, l/t)

You may not understand it now but I ask you to use this as a basis in your quest to master Forex and as long as you dont deviate from this basis, you will one day find the answer along with...

Superb post...quality reply.

S&R is the best price action indicator in the market.
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