Support and Resistance – the two key words
June 25, 2009 by admin
Filed under Featured, Forex Tips
To really be with you the behavior of a currency on the Forex market it is vital to see how it has behaved over a cycle of time. Taken over the course of a very small space of time, it is possible to make data mean just about anything. This, in turn, means that the data will be nearly worthless. Over a longer cycle of time, but, patterns always seem to assert themselves, and establish a firm basis for predicting the future behavior of a currency fee. Among the most vital figures that appear in a pattern are the support and resistance points.
The point of “support” for any currency is the fee level beneath which a currency never trades – effectively its market “bottom”. Whenever the fee reaches this level, it nearly always bounces back upwards, and for this reason many people will invest when a currency hits that point. Conversely, the “resistance” point is the traditional high point of a currency fee, above which it never trades. If you are looking to cash out, this is a excellent reference point.
Of course, the ancient saying “there’s a first time for everything” exists for a reason. There will come a time when a currency breaks its support or resistance levels, and this is seen as hugely vital. When a currency does this it will be expected to continue this trend, possibly for an extended cycle of time. It is therefore a excellent time to get “in” if it is rising or “out” if it is falling.
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