Identifying Supports & Resistances

Supports & resistnces in EUR/GBP daily chart

Support and resistance levels are the most important leading indicators in forex trading. If you throw a rubber ball to the ceiling, definitely the direction of the ball is reversed after it hit on the ceiling. So the resistance level acts as a ceiling for the rising price. But when the ball is hit by the floor again the direction is reversed. Support act as a floor for the decreasing price. Most of the times price bounces between supports and resistances. The figure shows daily EUR/GBP chart and in red color you can see resistance lines and in yellow color you can see support lines. At 0.8885 you can see a major resistance and at 0.8791 you can see a minor resistance. Likewise there is a major support in 0.8532 and a minor support at 0.8553. Having a good knowledge about supports and resistances are very important.