Support and Resistance Levels For Beginners Tron (TRX)
This post is meant for traders who may not understand support and resistance levels, how we establish these lines and why they're a useful tool.
Support refers to an area that is likely to cause a bounce or a trend reversal to the upside.
Resistance refers to an area that is likely to reject the price or cause a trend reversal to the downside.
So how do establish these lines? First we find an area where price struggles to break above (resistance) or an area that price stops and enters an upwards movement (support). Rather than draw one horizontal line that represents support/resistance, in my opinion it's better to have a "zone". The zone is essentially the area where a majority of the price find support or hits resistance. Price won't always reverse at the same exact point so we need to have a general idea of where support and resistance are. Sometimes yes, one support/resistance line will be enough and it will hit the same point more than once. For the most part, a zone gives you a better idea of where to buy.
On the left side support is created by the lowest part of the candle (the wick). The top of support is created by the body of the candle. These two lines give us our support zone. Think of support as a trampoline. As price falls we expect it to bounce up. Does this always happen? No. Sometimes price smashes straight through support. The more you trade the more you'll learn which support lines are likely to hold and which ones will fail. But even then no one is 100% accurate. The more times price hits these levels the "weaker" the level gets eventually failing. So the first support lines we draw would not have been know until AFTER we see the price bounce up. Once price establishes that low we can then draw horizontal lines across the chart so we know that if prices begins to retrace to those levels then we can see a possible bounce. Since we know price could possible bounce in a support area we can set out buy orders in that zone.
As for resistance we will generally draw our horizontal line across the highest price action. If price breaks through the resistance we can expect a rally to follow. Think of resistance as a ceiling. Price is rising and then boom it crashes into the ceiling causing it to fall back down. Price can then try again to break through this ceiling, if it does then a rally is likely to follow, otherwise known as a breakout. Note that once price breaks through resistance, the resistance now becomes a support level. The area that acted as a ceiling will now act as the trampoline. Be cautious of false breakouts. This is when price breaks resistance but then ends up falling back below resistance.
It's important to understand that support and resistance can be drawn just about anywhere. The key is to find the major support and resistance zones.
So now look at where price is currently at. Look at the support zone that's just below it and look at the resistance zone above it. If price begins to fall would you buy in the support zone? If price begins to rise, would you target the resistance zone as your sell target? Take a minute to look at the chart and decide what you would do. The answer to this depends on more than a support and resistance zone. Like I've said, you can't rely on one tool to give you all the answers. Use what you now know about support and resistance to help guide your trades. Remember support/resistance can fail without warning. Without risk, there is no reward. Buy at support, sell at resistance
Support refers to an area that is likely to cause a bounce or a trend reversal to the upside.
Resistance refers to an area that is likely to reject the price or cause a trend reversal to the downside.
So how do establish these lines? First we find an area where price struggles to break above (resistance) or an area that price stops and enters an upwards movement (support). Rather than draw one horizontal line that represents support/resistance, in my opinion it's better to have a "zone". The zone is essentially the area where a majority of the price find support or hits resistance. Price won't always reverse at the same exact point so we need to have a general idea of where support and resistance are. Sometimes yes, one support/resistance line will be enough and it will hit the same point more than once. For the most part, a zone gives you a better idea of where to buy.
On the left side support is created by the lowest part of the candle (the wick). The top of support is created by the body of the candle. These two lines give us our support zone. Think of support as a trampoline. As price falls we expect it to bounce up. Does this always happen? No. Sometimes price smashes straight through support. The more you trade the more you'll learn which support lines are likely to hold and which ones will fail. But even then no one is 100% accurate. The more times price hits these levels the "weaker" the level gets eventually failing. So the first support lines we draw would not have been know until AFTER we see the price bounce up. Once price establishes that low we can then draw horizontal lines across the chart so we know that if prices begins to retrace to those levels then we can see a possible bounce. Since we know price could possible bounce in a support area we can set out buy orders in that zone.
As for resistance we will generally draw our horizontal line across the highest price action. If price breaks through the resistance we can expect a rally to follow. Think of resistance as a ceiling. Price is rising and then boom it crashes into the ceiling causing it to fall back down. Price can then try again to break through this ceiling, if it does then a rally is likely to follow, otherwise known as a breakout. Note that once price breaks through resistance, the resistance now becomes a support level. The area that acted as a ceiling will now act as the trampoline. Be cautious of false breakouts. This is when price breaks resistance but then ends up falling back below resistance.
It's important to understand that support and resistance can be drawn just about anywhere. The key is to find the major support and resistance zones.
So now look at where price is currently at. Look at the support zone that's just below it and look at the resistance zone above it. If price begins to fall would you buy in the support zone? If price begins to rise, would you target the resistance zone as your sell target? Take a minute to look at the chart and decide what you would do. The answer to this depends on more than a support and resistance zone. Like I've said, you can't rely on one tool to give you all the answers. Use what you now know about support and resistance to help guide your trades. Remember support/resistance can fail without warning. Without risk, there is no reward. Buy at support, sell at resistance
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