Power Lesson 5: Finding support and resistance

Prices do not move randomly. When you have a moment, pull up any chart of any security and you will see that price movements follow patterns, which tend to repeat themselves. Technical analysis is the study of these patterns. Two words that are heavily used in technical analysis are support and resistance. Support refers to the level at which the price has a pattern of "bouncing off" after previously touching it or almost touching it. Resistance is the reverse situation. It is the level on a chart where prices have difficulty passing or getting above. Figuring out where support and resistance lies is critical to successful trading, because it is used to determine the two crucial decisions every trader should make: Where should I enter the trade and where should I exit a trade.

There are many tools that traders can use to figure out support and resistance levels. They include Fibonacci levels, stochastic oscillators and patterns such as double tops, and head and shoulders. The FX Power Course will explain in detail the most commonly used tools for finding support and resistance, how to use them, and examples of how they have worked in the past. The sooner traders master spotting support and resistance levels, the sooner they start making money in the currency markets.