Support and Resistance Are Like Mirror Images and Have Many Common Characteristics.
Support Can Be Established With The Previous Reaction Lows. Resistance Can Be Established By Using The Previous Reaction Highs.
Some Of The Ways To Find Support And Resistance Levels Are As Follows:
Psychological Levels Occur When Price Ends With Multiple Zeros. It’s Human Nature To Attract Towards Round Numbers. Most Commonly Traders Place Their Orders Around Round Numbers. That Why We Often See Groups Of Orders Around These Whole Numbers, Which Creates Price Levels That Can Affect How Price Acts. That’s Exactly What We Want For Our Support And Resistance Levels So Psychological Levels Is One Of The Method Of Creating Support And Resistance Levels.
Another Great Way To Find Support And Resistance Levels Is To Mark Levels In The Past Where Price Had A Difficult Time Breaking Through. As Price Moves Up And Down, Each Level That Price Has Bounced Off Of Could Be A Level In The Future That Price Bounces Off Of Again. We Call Them As Swing High And Lows And These Levels Acts As Support And Resistance Levels For Future Reference.
This Is the Easiest Way to Create Support and Resistance Levels to Add to Our Charts, Pivot Points Are a Built-In Indicator on Many Charting Software’s That Will Automatically Draw Key Levels without Any Effort on Our Part At All. Pivot Points Are Created By The Previous Period’s High, Low And Close Prices, With The Most Common Period Size Being The Daily Period. We Can Use These Levels Just Like Any Other Potential Support And Resistance Levels On Our Charts.
There Are Many Other Methods Too For Creating Support And Resistance Levels. And These Are Major Moving Averages, Price Trend, Trend Channels, Bollinger Bands, Etc. And Will See All Of Them In Details In Upcoming Posts.