Suport and Resistance

Understanding support and resistance is critical to becoming a quality forex trader. One of the great advantages to trading the forex is that it tends to react similarly at price highs and lows. Highs are areas in price movement where a currency runs out of steam and a price retracement or reversal is eminant. Lows are the same thing accept in the opposite direction. When the market reaches a certian high and cannot break through it, that price become market resistance. Likewise when the market reaches a low price and can not break through it it becomes price support. The more times the price hits a certain high or low and fails to break through it, the stronger the resistance or support of that price. Often times when price finally breaks through the support or resistance, that past support becomes future resistance and likewise the past resistance becomes future support. Please note that all the charts below are real charts and not drawings.