Zoe Fiddes in this video speaks about support and resistance levels and the associated trading psychology to these levels.
The reason that these resistance and support levels form in a market, when price is range bound, when price bouncing between the floor and the ceiling, it has got a lot to do with psychology and the consensus of the market. When price reaches a certain point, it turns back round and comes back to the floor and so on. When price reaches the high point or resistance, you can see that the people get nervous to continue buying at that point So, the patterns that you see on the chart, all come from psychology of the market. That is why you see this support and resistance levels.
Let’s consider an example. Let’s say the sterling against the US dollar reached 1.60 last week. This week it comes down to 1.55 and back up to 1.60. With no news out there, you would not feel comfortable buying beyond 1.60. So, the market will not pay more for something that they believe is at the highest price. It is like when you go to a shop, they sell something for $9.99 rather than $10, you are more likely to buy at $9.99. It is exactly the same the psychology around these big figures.
© Prabhu for Forex Videos, 2018. |
Permalink |
No comment |
Add to
del.icio.us
Post tags: Forex video, support and resistance, technical analysis, trading pscychology
Feed enhanced by Better Feed from Ozh
Disclaimer: Please note all prices are for information only, they should not be relied upon for accuracy or trading. All prices quotes are based on CFD prices and are similar though not always identical to real exchange prices. STOCKTRKR or anybody connected with STOCKTRKR will not accept any liability for loss or damage arising from use of any information/commentary/charts or articles which is provided 'as is' for educational purposes only, nothing contained on this website should be considered as investment advice - please seek proper investment advice from registered financial broker or institution if you wish to trade on global markets and ensure you are familiar with the risks.
