Support and resistance
Support and Resistance are the most common technical analysis used by traders to enter a position in
the forex market. Traders use support and resistance to identify the level in the chart where price could
reverse or consolidates from. Support is formed where a bearish trend pauses due to the demand of the
orders while resistance is formed when a bullish trend pauses because of the selling interest. (Casey
Murphy, 2021).
Support acts as a floor that does not let the price fall further down and resistance act as a ceiling that
does not let the price rise further up. When the price reaches the zone of support or resistance, the price
either breaches the level or bounces back from the level till the next support or resistance zones. (Casey Murphy, 2021). Also, if a price breaks support, then that area of support is treated as resistance and
if a price breaks a resistance, then that area of resistance is treated as support
FIGURE 2. Support and Resistance Zone on EURUSD chart.
In Figure 2, we can see support and resistance levels. The support zone can be seen as the level where
price could not breach further, hence acting as a floor, and the resistance zone can be seen as the level
where the price is not being able to breach further upwards hence acting as a ceiling
