Technical Analysis Support And Resistance
How To Trade Forex Using The Levels Of Support And Resistance
Most of the Forex traders use technical analysis to find the best moment to enter the market. Analyzing the charts you can easily see the historical movement of the market and this information may give you some idea of the future direction of the rates. One of the basics of technical analysis in Forex Trading are the levels of support and resistance. Each time the price breaks a level of support or resistance, it is usually changing to another state and forms new levels of support or resistance according to its location. Usually the changes are reversal – the support level becomes resistance and resistance turns to a support level.
A rate of any currency pair always has the levels of support and resistance and its further movement has certain depending on these levels. Once it breaks one of these levels and doesn’t come back immediately so it is a good signal for any Singapore Forex trader for a potentially profitable trade. However, breaking of one of the levels is not enough in order to guarantee you a big chance for a successful trade. It also depends on the quality analysis of the breakthrough of the support and/or resistance levels.
Forex market has a spontaneous nature and sometimes it is very unpredictable. Its volatility is often called as “market noise” and causes a lot of random movements. Making some researchers among the technical analysis books and internet materials we can often find the images of a strong and clear trend appearing after breaking one of the support or resistance levels. Such examples give a false impression to any newbie trader that Forex trading is so simple and making profit is so easy. But the real Forex market is not as simple as it looks on the pictures. In order to see how it works, you can analyze the historical movements of one of the currency pairs in the candlestick chart. There you will find many support and resistance levels in the past periods and will be able to examine their breaking and trend appearance. As you will notice, in practice things are much more complicated and confusing. Here the problem is not only in the market noise mentioned above, it is a complex of different factors that can confuse any Singapore trader – market’s unpredictability, volatility, traders emotions and many others.
In order to make the correct trading decisions and guarantee yourself a chance for profitable trade, you cannot do without the certain criteria and rules that you will apply to the markets’ analysis before entering the market. These criteria will help you define true and potentially good situations from false and irrelevant ones and increase your chances for success.
According to their own experience many Singapore Forex traders obtain the levels of 3-5% for short-term trends and 10% for long-term trends. However, this approach is very simple and doesn’t reflect the real situation at the moment of the breakthrough price movements. Sometimes it is very difficult to determine for what trend these 10% or 5% must be counted.
About the Author
Daniel Shaw has many years of experience in Online Forex Trading. Visit his site Trading in Singapore to learn more about Singapore Forex Trading.
Nasdaq Comp Daily Technical Analysis Support and Resistance
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