How do I find the key support and resistance? Read my new achievement in the world of trading several times, you will understand where you made my mistake!! Maybe now that you want to read my experience, there is no need for me to explain about support and resistance, but I will briefly introduce support and resistance on the chart to remind you again.
A summary of the meaning of support and resistance in simple language
In general and in simple terms, support means buying stocks at the lowest price by buyers (market bulls). When a stock is overbought by market bulls, it causes a shortage of stocks and its price increases. Resistance means the opposite of buyers and when the price of a stock reaches its peak, sellers (market bears) will sell their cryptocurrencies and ultimately lead to a decrease in price. Technically, support and resistance are of particular importance and the strength of each can determine the overall price trend.
What I have experienced about key areas of support and resistance
Now that you know a little about support and resistance, how do you find key support and resistance areas on a chart? Feel free to send me your feedback and I will definitely respond. What I have experienced about key support and resistance is that it refers to areas that, if broken, will lead to a trend change. So let’s go through each point and see how to find key support and resistance on a chart.
- Typically, key support and resistance areas appear in an area of the chart where the price has either reached or is nearing its bottom or is nearing its top. When the price is nearing its bottom, buyers will start to support. When the price is nearing its top, sellers will sell their shares and resistance will start to build.
- The price floors and ceilings are getting closer to each other until they eventually neutralize the price for a short or long period of time, and a neutral trend is likely to develop.
- After the price is compressed, one of the groups will eventually win, either the bulls or the bears, and the range channel will be broken. If the buyers are stronger, the channel will break upwards, and if the sellers are stronger, it will break downwards. As for whether the buyers are stronger or the sellers, we should examine the technical and fundamental signs and signals, or even the data. I must say that usually the breaks are made with strength and the trading volume is high.
- But the last point that may be most useful for finding key support and resistance areas. When an area is of particular importance, be sure to pay attention to the composition and type of candles. Usually the price breaks in a direction where the candles have weak bodies and short bars. Indicators such as the MACD can help, but since I believe that all indicators should use a chart, I prefer to analyze the chart myself first, so I did not talk much about indicators in this article.
I am Omid Hagh, a trader and author of the blog. I know that my explanation may not be complete, but I have tried to explain my experiences to you.
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