For traders, one concept that is hard to figure out is that of support and resistance . This is perhaps so because support and resistance are invisible until they are encountered , and even then without using multiple timeframes it can be hard to recognize what is actually happening .
There is a lot of effort and time that go into using technical analysis training course to determine where support and resistance levels are in the market . Many different tools have been used , including moving averages, trend lines, candlesticks, and retracement levels .
Some work and some don’t , and more frustrating , some may not work all the time, but some of the time. The information on whether or not an indicator or tool is going to work is information worth a lot of money .
Most efforts fall short because they attempt to use a single tool , and they try to put it in one timeframe , and they try using it in every circumstance . You reap better results when various tools, optimized for a particular condition of the market , are used in a program that is organized and thought out that keeps in mind congestion and trend action . Technical analysis training course will show that further progress towards accuracy will occur as you use various tools and apply them to different timeframes and the differing results are taken into consideration .
You get the best results when a comprehensive theory of market action is employed that can help the trader understand what the market is doing right now , why the market is doing that, and what is likely to happen in the near-term future , and provide traders with a projection of support and resistance levels that can be monitored in real time as the market steps forward .
A tall order ? Maybe , but it has been accomplished in a number of major technical analysis systems .
Here’s a look at a few definitions .
Something below price is support, and this force when encountered helps to raise prices back up to where they were. Support involves buyers that are in the market but waiting to take action until prices go to a particular level, or of short position holders who may be forced to buy if the market runs against them . This group of buyers that flock around a particular price that cause support to actually support prices.
Resistance is something above price , and this force if encountered will take prices back to their previous range. It consists of sellers who are present in the market but waiting to take action until prices hit a certain point , or of long position holders who may be forced to sell if the market runs against them .
Both resistance and support can be easily identified with conventional technical analysis such as a 10 period moving average . Or a more involved system can be represented like you learn in technical analysis training such as Drummond Geometry .
With this method we see a more evolved use of tools in order to create more time period overlays of resistance and support areas to a daily chart, coming from the weekly and even the monthly charts. These more developed methods provide better support for traders making decisions to sell or buy. Support and resistance areas can be projected for the future with this method , so as the market moves on the trader can be prepared .