9 Points to Remember while using Support and Resistance Price Levels

9 Tips while using Support & Resistance Levels

1. Support level is the lowest price point of a particular price swing on the chart from where the price starts advancing due to an increase in demand.

2. Resistance level is the highest price point of a particular price swing on the chart from where the price starts declining due to an increase in supply.

3. Support and Resistance price levels are not a clear cut price level; they are a small area known as demand and supply zones.

4. Support and Resistance price levels are horizontal lines on the chart, and a single price level is also sufficient to build a support or resistance price level, but the more times prices are tested on a single price zone, it becomes more and more important price level.

5. A quick run away from any price is an important price level as it indicates a higher pressure of either demand or supply.

6. Latest support and resistance price levels are seen to be more effective than the older ones.

7. The support and resistance price level are valid until it is broken i.e. once the price penetrates deeply and shows a closing at the opposite direction; it is no longer an important price level.

8. If price breaks an important support level, then it potentially becomes an important resistance level and vice versa.

9. The longer the price is supported or resisted at a price level, the stronger could be the future move after breaking that price level.

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