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Chapter 8, Part I. Support and Resistance Page 7

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Pipruit: Hey, this does really help in the beginning, but still, they are not sharp price level as you’ve said.

    I will have to remember that support and resistance are areas and not the fix levels.

    Also, Commander, I notice, that the same line was support and then become a resistance and vice versa – is it normal? Just take a look at the first line on previous chart – see, it was support once, but after downward breakout has become a resistance, and the latest line on the chart also…

    Commander in Pips: Well, done. Yes, this is one of the features of support/resistance lines, and there are more, so let’s discuss them:

    1. When price breaks, say support level, later it could retest it and this area can act as resistance. The same is true for resistance level – after breakout, it could act as support if the market will return and retest this area.

    2. The more often price tests the level – the weaker it becomes, because market bounce from the level due to participants who open positions against the previous market move. Sooner or later, if market returns to this level again and again – all who wants to enter against the market – have done this, so there will not be any participants who want to open against the market. With each touching of the level fewer and fewer people are ready for entering on a counter side and eventually there will be no one who intends to do this.

    3. The longer some level holds, the stronger could be the move after true breakout of this level.

    4. The longer your time frame – the wider support/resistance area.

    So, that’s all for today and don’t forget our previous 4 rules. I think that you can start to practice with support and resistance lines already in a demo account. What are you waiting for

    Pipruit: Yeah, I’m itching to get started…Thanks.​



    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer them soon.



    Note: FPA ranks are earned in the battles against scam, not in the classroom.
     
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