Understanding Structure, Support and Resistance
As shown on the graph, structure analysis could be very useful.
Resistance line: Use maximums and connect them to draw a resistance line which means that whenever price comes to this line it cannot break it, ther is a strong resistance, forming a trend. Once broken, though, it is a good opportunity to BUY and profit from price increase.
Support line: Similar logic to resistance, however, this time all minimums are connected in order to establish a lower bound for price fluctuations. Once broken, it suggests that price has a strong downward momentum and traders can benefit by SELLING.
Resistance line: Use maximums and connect them to draw a resistance line which means that whenever price comes to this line it cannot break it, ther is a strong resistance, forming a trend. Once broken, though, it is a good opportunity to BUY and profit from price increase.
Support line: Similar logic to resistance, however, this time all minimums are connected in order to establish a lower bound for price fluctuations. Once broken, it suggests that price has a strong downward momentum and traders can benefit by SELLING.
Penafian
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