Support, Resistance, and Moving Averages

Support, Resistance, and Moving Averages

As price moves up and down on our charts, it encounters “barriers” along the way. If this barrier acts like a floor, keeping price from dropping any lower, it is known in trading terminology as support.

As price moves up and down on our charts, it encounters “barriers” along the way. If this barrier acts like a floor, keeping price from dropping any lower, it is known in trading terminology as support. When it acts more as a ceiling and stands in the way of upward moves, it is called resistance. What is interesting to note is that if a certain
price level acts as resistance on the way up (such as the doji candle which highlights a moment of market indecision on the way up at 1.4848 in the example on the right), then it also has a high probability of acting as support on the way back down (and viceversa).

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