Support and resistance levels are the technical indicators that allow traders to spot the best areas of buying and selling opportunities. Understanding Support and Resistance is very crucial but understanding How to draw Support and Resistance is even more crucial. Therefore, In this article, I will cover everything about Support and Resistance levels and how you can draw Support and Resistance levels on the Binomo trading platform.
Facts about Support and Resistance
- Support and Resistance is a manually drawn horizontal line that helps traders to identify potential trends and reversals.
- The Support level is the price level, where the demand for security is so strong enough that it can prevent the price from falling down any further.
- The Resistance level is just the opposite of the Support level. The Resistance level is the price level, where the demand for security depletes and buyers start selling their shares.
- There are multiple ways of drawing Support and Resistance levels such as Horizontal lines, Fibonacci levels, and Moving averages.
- The Support and Resistance levels are very strong levels and are not very easy to break however, Support and Resistance levels may not always hold up in volatile market conditions, especially in the case of News, or big events.
- If due to market volatility the price is successful in breaking the Support and Resistance levels. The price is most probably going to stay in the same direction until the next level.
Draw a Support line with lower Bottom
In order, to draw a Support line you need to first find the two bottoms of the candles which are at the same distance. Once you spotted the lower bottom. click on the drawing tools button and select the horizontal line from the menu. Now, place the horizontal line below the two bottoms. that will create our Support level.
Draw a Resistance line with higher tops
Similarly, to draw a Resistance line firstly, click on the drawing tools button and click the horizontal line from the menu. now, find the two tops of green and red candles at the same distance and place the horizontal line above the two.
Buy with a Support level
A Support level indicates a strong buyer’s force and the force is so strong that it can even reverse the ongoing seller’s domination. Therefore, when the price is near the Support level you should go for a buy trade.
Sell with Resistance
Similarly, The Resistance level indicates an upcoming bearish trend and the end of buyer domination therefore, when the price is near the Resistance level you should place a sell trade.
Support and Resistance are the ABC of trading and every trader must understand and learn how to draw Support and Resistance and trade with same. In this blog, I tried my level best to explain to you the proper concept of Support and Resistance if you still have any doubts do comment below and I will suggest you practice drawing Support and Resistance on Binomo trading platform for free you will get $10, 000 in your virtual trading account you can also use those virtual currencies and trade and make money with the same.
I wish you a very best of luck 😉