In order to fully understand the core of the support and resistance trading strategy, traders should understand what a horizontal level is. A horizontal level is:
- A price level indicating either a support or resistance in the market. In technical terms – price lows and highs respectively.
The term support indicates:
- The area on the chart where the buying interest is pointedly strong and exceeds the selling pressure.
The Resistance level indicates:
- An area on the chart where selling interest overpowers buying pressure. It is usually marked by previous peaks.
In order to develop a support and resistance strategy traders should be well aware of how the trend is identified through these horizontal levels.