Support and Resistance indicators are crucial for traders who are involved in Forex or CFDs. Different variations of support and resistance trading are used in other financial markets as well for different types of assets and trading instruments.
Despite the popularity, the concept of trading those lines is still pretty arguable. But one will hardly disagree with the statement that support and resistance come as an essential part of the technical analysis, which attributes to different chart patterns. It is actually used to predict the trend or price from moving in a certain direction.
In this article, we will discuss how to identify the two lines as well as what the best support and resistance indicators are to use during trading.
Support and Resistance Indicators Explained
The concept is not as hard to figure out, as it seems. You need to clearly understand the following: there is a point where the trend makes a stop. This point is the support or resistance depending on the direction the trend moves to.
Besides, we need to take into account support and resistance zones. They appear when a point is not confined to a single one (or reverses from a series of other points). The main challenge here is that you will never find a stand-alone support and resistance indicator in case you want to track dynamic changes in reference to supply and demand.