Did You Know About The Types Of Support And Resistance In Trading?
When you are looking for methods to make important trading decisions relying on technical analysis is one easy way. Even trading bots like Bitcoin Code which are known to yield huge profits are known to work on the basis of technical analysis. Support and resistance levels are the most important parameters observed to take critical trading decisions. But did you know the many types of support and resistance available in trading?
In general, a support level is one which indicates the lowest that the price reaches below which it might possibly not fall. The resistance level, on the other hand, is the high above which the price might face a lot of resistance to rise.
Dynamic highs and lows
When you plot dynamic levels on the basis of moving averages, then these are called dynamic support and resistance levels. You would find these levels to be useful both on daily and weekly charts. If you prefer trading based on trend following then this is one indicator that can help you identify the position to enter the trend.
50% retracement is prone to occur with a higher probability in most assets. When there is a swing, if the market makes unexpected movements there is a high chance of retracements to occur.
Support and resistance in the event area
If you are used to studying event areas you would understand the support and resistance in these areas better. If price action events have recently occurred then there is a very good chance of a price reversal. In such instances, if you observe the support and resistance levels you would be able to identify trading opportunities as well as understand the cause behind the price change.
Swing lows and highs
These are the most straightforward price reversal levels on the weekly and monthly charts. These are the levels that clearly indicate that some market event had occurred. You can take this type of support and resistance levels as the primary option. When these levels are scrutinized with attention to every detail, you would find valuable market information.
Bullish and bearish market trends have different impacts on different assets. So unless you understand the possible resistance and support levels in a trade you would not be able to predict the price directions. So understanding the various support and resistance levels and knowing when to use them would help fine-tune your trading decisions.