Support and resistance lines allow traders to visualise the range within which the asset price is moving. Support creates a lower limit of price, and resistance constitutes the upper level. Here is how to identify support and resistance levels for an asset price.
– Historical data is a reliable option to identify support and resistance levels for the asset. Traders take into account periods of significant gains and losses as indicators for future price movements
– Support and resistance change their roles when a breakout happens. Traders take into account previous support and resistance levels to understand how asset price has moved
– Fibonacci Retracement also offer a useful technical analysis in understanding dynamic support and resistance levels
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