Technical Analysis Training – Explaining Resistance and Support
For traders, one concept that is hard to figure out is the concept of support and resistance. This is perhaps so because support and resistance are invisible until they are encountered , and even then it can be had to see it unless you use multiple timeframes.
There is a lot of effort and time that go into using technical analysis training to figure out where the levels of support and resistance happen to be in the market . Various tools are used , including moving averages, trend lines, candlesticks, and retracement levels .
There are some that don't work and some that do, and more frustrating , some work some of the time but not always . Knowing when a tool or indicator will be reliable is information that is worth a lot .
Most efforts fall short because they attempt to use a single tool , and try to apply it to a single timeframe , and they work to use it under every condition. When various tools are used you get better results , optimized for a particular condition of the market , are put to use in a very organized and thought out program that takes into consideration trends and congestion. Technical analysis training will continue to show that progressing towards precision when applied to various timeframes at the same time will accrue and there is consideration of the various results.
Top results occur when you use a total theory of action on the market that shows a trader the market and it's current status, why it's currently doing it , what is probably going to happen in the near future , and supply the trader with projected levels of support and resistance that as the market goes forward can be monitored .
A tall order ? Maybe , but various technical analysis systems have accomplished this .
The following are several definitions.
Something below price is support, and it is a force that when encountered pushes price back up into the range from where it came . This is made up of market buyers that are there but waiting to move until prices go to a particular level, or of those short position holders that have to buy if the market begins going against them. Those buyers that bunch up around a specific price that make support occur .
Something above price is resistance, and this force if encountered will take prices back to their previous range. This includes those sellers waiting to make a move until the prices go to a particular level, or of those long position holders who must sell if the market goes against them.
Both resistance and support can be easily identified with conventional technical analysis using something such as the 10 period moving average. Or it can be represented using a more evolved system taught in technical analysis training such as Drummond Geometry .
There is a higher use of tools in this particular method in order to create more time period overlays of resistance and support areas from the weekly and monthly charts onto daily chart . These higher methods provide traders with more support when making decisions to buy or sell . Support and resistance areas can be projected for the future with this method , so as the market moves on the trader can be prepared .
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