Trading with Support and Resistance

Support and Resistance

A ball on the floor and bounce. As the ball on the ceiling he would fall. Support and resistant such as floor and ceiling with a price located between them. Understanding support and resistant can be used to determine price trends and patterns on the chart. Calculate the power they can assist you in determining whether the trend will continue or will reverse.
Support is the price level at which buying has the power to disrupt the movement of the market, or reverse the downtrend. When the downtrend on the support, then he will be like a diver bounces on the base and was forced to stay away.
Resistant is level while selling prices rose to interrupt or reverse the uptrend. Currently uptrend on resistant, he will stop or goes down like someone who bumped into a tree limb while riding.
Better define the support and resistant at the end of the area where the price of such a stop rather than the position of extreme price. The end of the show the position where the trader banya change their decision, while prices showed extreme panic weakest traders.
Support and resistant causing minor trend to stop temporarily, while support or resistant major cause change trend. Trader usually buy at support or sell on resistant to effectively realize their analysis.

Trading rules

1. When you follow the trend approaches support or resistant, narrow down your stop loss. Stop loss is an order to sell below the market price at the time you buy position or vice versa. It protects your stop loss of market movement against you. Trend will show the current health of the support or resistance. If the trend is strong to penetrate these areas, then the trend will move faster and your stop loss will not be achieved. But if the trend reverses direction and away from the support or resistant, then the trend is weakening. In this case, your stop loss will be useful in reducing the losses due to the weakening trend that you follow.
2. Support and resistant even more important in the long term chart rather than short-term charts. Weekly chart is more important than daily. A good trader usually analyze some time frame chart and a longer timeframe concerned. If the weekly trend running without interruption, the reality on the daily trend has hit the resistant is not too important. When the weekly trend approaches support or resistant, then you need to be more vigilant.
3. Level Support and resistant useful in putting a stop loss or profit target. On the basis of the jammed area is basic a support line. When you buy and put the stop loss below that level, you give your uptrend relief space. Many traders are careful - careful when putting buy an uptrend already breakout and put your stop loss area amid stalled. Upside breakout of the original will not be followed by a return to the range, such as a rocket that did not go down again to the runway after launch. So contrary to the downtrend.

True and False Breakout.
Market more do ranging than the trend. Most breakout from the ranging is false breakout. They suck up the trend followers before prices return to a position ranging. False breakout is kutukanbagi amateurs, but professional traders menyuakinya.
Professional wait for the price change, but not too far. They waited till an upside breakout stops reaching a high level or a downside breakout stops making low level. Then branded a trade against the trend and put a protective stop at the extreme point of the most recent. It is a narrow stop position, and they are low risk, while the potential profit from the trend of sizeable pullback. Ratio Risk / reward is still good enough that the professionals who make the mistake of half of the total open positions can still enjoy the benefits.
The best time to buy on the upside breakout in the daily chat is when your analysis on the weekly chart indicates that a new uptrend is being formed. True breakouts are confirmed by a large volume, while false breakout usually has a small volume. True breakouts are confirmed when technical indicators reach new extreme value on the high or low in accordance with the direction of the trend, while false breakouts are often characterized by the difference between price and indicator.