Why Are Psychological Levels So Vital In Trading ?
WHAT ARE PSYCHOLOGICAL LEVELS AND HOW DO THEY WORK?
Psychological levels are market price levels which are often key levels in forex denoted by round numbers. These round numbers frequently act as levels of support and/or resistance.
Psychological support and resistance consistently work because of fundamental human disposition. Human beings value simplicity; from a trading perspective this means valuing whole numbers. Traders often use these numbers as entry, exit or stop levels. These stops and limits can alter order flow and price changes.
IDENTIFYING PSYCHOLOGICAL LEVELS ON FOREX CHARTS
Traders will often call these whole number intervals ‘double-zeros,’ as these prices are at even numbers such as 1.3000 in the EURUSD. See the chart below and observe how the price acts around these levels in the case of EURUSD M charts.
These levels works best on Higher timeframes especially on the Monthly charts. The link below reveals one of the example on how a trader can incorporate this particular element of trading in their analysis and setups
Cheers, I hope you found this educational material helpful
Psychological levels are market price levels which are often key levels in forex denoted by round numbers. These round numbers frequently act as levels of support and/or resistance.
Psychological support and resistance consistently work because of fundamental human disposition. Human beings value simplicity; from a trading perspective this means valuing whole numbers. Traders often use these numbers as entry, exit or stop levels. These stops and limits can alter order flow and price changes.
IDENTIFYING PSYCHOLOGICAL LEVELS ON FOREX CHARTS
Traders will often call these whole number intervals ‘double-zeros,’ as these prices are at even numbers such as 1.3000 in the EURUSD. See the chart below and observe how the price acts around these levels in the case of EURUSD M charts.
These levels works best on Higher timeframes especially on the Monthly charts. The link below reveals one of the example on how a trader can incorporate this particular element of trading in their analysis and setups
Cheers, I hope you found this educational material helpful
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