FOREX SUPPORT & RESISTANCE
Support & resistance is often the first thing that the forex technician will attempt to define before anything else.
Support is a key price level on the forex chart that the symbol can't seem to break below.
Resistance is a key price level on the forex chart that the symbol can't seem to break above.
The longer the support or resistance stays in place the less likely the breakout will occur. The force of the breakout is often stronger after breaking a stronger support or resistance.
When the price on the forex chart breaks out the old resistance becomes the new support and vice versa.
Often after a breakout the price comes back to retest its old support or resistance i.e. when the price breaks above a resistance it may pullback after a short run. This is often the ideal time to climb in.
Beware of false breakouts as the volatility in the forex market often allows a price to inch past its support or resistance with no intention of a true breakout.
The first strategy that may be implemented is to buy on the support and sell on the resistance.The second strategy is to buy on the pullback after a breakout occurs.