If you want to begin Forex trading in Forex (FX) markets you need to learn the ropes of FX trade. The first thing that you need to know is what kind of phases are in these markets. In FX markets you have “Up Trends,” “Down Trends,” and “Ranging.” When it comes to determining Ranges you need to understand Support and Resistance lines and levels. There are three different levels of support and resistance. The first level comprises of resistance level 1 denoted by “R1” within this level the support level is “S1”. The next level is the second level of resistance and support which are denoted as “R2” & “S2”. The third level is denoted as “S3” & “R3”. Remember that the market tends to start with the first resistance and support levels.
In the process of identifying Support and Resistance lines you simultaneously indentify trends. When identifying support and resistance lines, the markets can be in two different types of ranges. “Wide range” or “Narrow Range.” The basic principles of identifying Resistance and Support are:
1. If a line is drawn through common upper prices is called a “resistance line.”
2. If a line is drafted through the common lower prices is known as a “support line.”
The support and resistance lines have a lot of significance. They help in recognizing the upper and lower boundaries of price ranges and reversals and appreciations, this information aids traders in setting limits in the peripheries of these values with a degree of confidence.
Another significant feature is that the support and resistance lines help in getting signals for important trends of prices breaking through the lines. This phenomenon is known as “Breakout” apart from simply identifying the breakthroughs, through the lines it is also significant to measure their strength.
