Support & Resistance

When a Pair takes off the next question a Trader will have is how far will it go? If you look back in recent history you will see areas where the price stalled or Consolidated  for a while. These Consolidation areas create areas of Support & Resistance.  We expect the price to move to that area and stall for a while before rebounding or pushing on through.

Resistance - Consoldiation areas that stop the price from moving up.  A Resistance to the price moving higher.  The following example shows some resistance.

The yellow area can be considered consolidation.  When the price rebounded and started back up along the red arrow the question naturally becomes how high will it go?   If we look up to the bottom of the consolidation area where the red horizontal line is you can see that could become Resistance to the price moving higher.  

Sure enough, hind sight being 20/20, the price went up to that area and bounced back down.

Support -  If we reverse the picture the definition for Support is easily seen.   In this case the price can fall along the arrow until it reaches some form of Support.   The yellow consolidation area provides that Support.

Yes it is the exact same image just mirrored and flipped.  A point for new traders to understand is that they both look exactly the same to the experienced trader.

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