Support and Resistance Indicator MT4

Support and Resistance Indicator MT4 is quite popular in forex trading. Without it, traders will experience difficulties and losses in trading activities. Then, how to apply and use it to maximize profit potential in forex trading (Pepperstone reviews)? It’s time for you to find an easy way to determine support and Resistance with simple indicators, which we will explain below.

What are Support and Resistance?

In simple terms, support and Resistance are likened to the two attributes that are most discussed in the analysis, where support is a level that has the potential to withstand price declines. These levels determine whether the price will continue or reverse direction. Support and Resistance aim to determine the right area when taking a buy or sell position and determine the target of price movement. The support area is generally an area used to find buy positions, while the resistance area is used as a reference to find short positions.

Differences in the Focus of Support and Resistance

The support area is generally an area used to find buy positions, while the resistance area is used as a reference to find short positions.

Support Resistance

Levels that have the potential to withstand price declines Levels that have the potential to withstand price increases As a reference area for looking for buy positions As a reference area for looking for sell positions

Support Principle

Economic support can be interpreted as a level where supply begins to decrease and demand increases so that if this happens, prices will rise at that level.

In principle, if the market price penetrates the support level, it is estimated that the market price will continue to decline until the next support level.

However, if the market price cannot penetrate that level, the market price will certainly reverse direction. The support level that has been broken can become a resistance level and pressure the market price to keep going up.

Resistance Principle

Meanwhile, economic Resistance can be interpreted as a level where supply exceeds the maximum limit and demand has begun to decrease so that market prices will fall at that level. If the market price rises and breaks through the resistance level, it is estimated that the market price will continue to rise to the next level.

What is the Practice in Stock Trading?

Traders use this support and Resistance to analyze stock price movements.

A horizontal straight line indicates support in a stock movement chart. Traders can determine the lower limit of the price with this line where the stock price will not go down again and instead buy it with the calculation that the price will go up again after this. Each trader has their support line according to their knowledge and beliefs. Meanwhile, Resistance is indicated by a horizontal line. Traders avoid stocks whose prices touch the resistance line because they are considered not to be profitable. This type of stock will experience a decline in price because it has reached its highest price. The more high points that can make into a resistance line, the higher the strength of the Resistance. However, it does not mean that the price of a stock cannot pass the support or resistance point, which is commonly referred to as break support or break resistance.

Continue to hone your trading skills with support resistance

Reading financial reports and fundamental analysis is not enough when you want to trade stocks. Traders and investors should equip it with technical analysis. Read stock charts, and study chart patterns, including knowing support and resistance points to determine when to buy and sell stocks, and set take profit and stop loss to suppress deeper losses. Technical analysis such as support and Resistance does look difficult for beginners. But who can learn all this gradually? You will reap big profits and become a reliable trader or investor.