All right. . . Today we will learn how to determine support and resistance levels using a simple line. Well, before learning how to determine, first of all we have to understand first what the definition of support and resistance.
Brother, as we have learned together that a trend (either up or down) has a turning point. Suppose a price movement in an up trend then changed to trend down, the turning point of the rising trend to trend down is called RESISTANCE limit. Instead the point where there is a change of trend to trend down ride called SUPPORT limit.
How do I determine the levels of support / resistance with a simple line?
This method is the simplest way to determine the levels of support and resistance. Without the use of formulas, calculations, you can apply this way. Although simple does not mean the level of usefulness is also reduced. Even simple line can say "BUT THE EXTREMELY POWERFUL METHOD Easiest".
In order to determine the levels of support and resistance with simple line method is straightforward. (To limit resistance) you can simply look at the highest price in a period and then draw a straight line as the green line in the picture below. This line will give an indication to you that you can have a prediction for this price. As shown below, the highest prices in a given period is called the boundary resistance. Likewise, levels of support, you can simply look at the lowest limits in a certain period and then you pull the line (see red line in the picture below)
Brother, as we have learned together that a trend (either up or down) has a turning point. Suppose a price movement in an up trend then changed to trend down, the turning point of the rising trend to trend down is called RESISTANCE limit. Instead the point where there is a change of trend to trend down ride called SUPPORT limit.
How do I determine the levels of support / resistance with a simple line?
This method is the simplest way to determine the levels of support and resistance. Without the use of formulas, calculations, you can apply this way. Although simple does not mean the level of usefulness is also reduced. Even simple line can say "BUT THE EXTREMELY POWERFUL METHOD Easiest".
In order to determine the levels of support and resistance with simple line method is straightforward. (To limit resistance) you can simply look at the highest price in a period and then draw a straight line as the green line in the picture below. This line will give an indication to you that you can have a prediction for this price. As shown below, the highest prices in a given period is called the boundary resistance. Likewise, levels of support, you can simply look at the lowest limits in a certain period and then you pull the line (see red line in the picture below)
What Functions For You?
Well brother, according to the definition above, the traders use support and resistance limits to predict price movements. In other words, if the price is approaching the levels of support and resistance, you need to be vigilant because it will very likely reverse the price trend. However, it does not always happen that way also. Price movements can also penetrate through the boundaries of resistance, and continued the movement, without turning. If this is the case then the limit is breached earlier resistance to limit automatic support. For more details, please see the following picture:
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