THE CONCEPT OF SUPPORT BECOMING RESISTANCE

In the context of forex trading, the concept of "support becoming resistance" refers to a phenomenon that occurs when a price level that previously acted as a support level for an asset's price now switches roles and becomes a resistance level after it has been broken.

Here's a more detailed explanation:

Support Level: In forex trading, a support level is a price level at which a currency pair or any other financial instrument tends to find buying interest. This buying interest is strong enough to halt or reverse a downtrend in the price. Traders believe that the asset's price is likely to "bounce" off this support level and move higher, making it an essential point on the price chart.

Resistance Level: On the other hand, a resistance level is a price level where selling interest is significant enough to prevent the price from rising further. It acts as a barrier that tends to halt or reverse an uptrend in the price. Traders expect the price to "bounce" off this resistance level and move lower.

Support Becoming Resistance: The interesting concept comes into play when the price breaks below a previously established support level. When a support level is breached and the price continues to decline, it signifies a shift in market sentiment. The level that was once a support now becomes a resistance level for the price. If the price attempts to rally back up and reach that previous support level, it often faces selling pressure from traders who missed the initial breakdown and now see it as an opportunity to sell at a better price. As a result, the price might struggle to move beyond that level, and it starts acting as a resistance zone.