Support is a price level where a downtrend, a period of decreasing prices, can pause due to a concentration of demand. Usually, when prices are declining, there is greater supply (selling pressure) than there is demand (purchasing interest). However, if costs decrease, they may become more alluring to prospective customers. Prices eventually rise to a level where demand is high enough to reverse the downward trend. We refer to this stage as support.

Think of support as the floor under the price. It's the level where buyers step in, believing the price is low enough to be worth buying. Sometimes, support is a specific price, but it can also be a price zone, a range where buying interest is strong enough to prevent further declines.

Resistance is the exact opposite of a support. It is the price level at which the bullish momentum can stop , slow down or outright reverse. Resistance marks the price level at which more sellers start to show up and potentially dominate the strength of the buyers.

Another implication of resistance is that it is the price at which several buyers might think that they have already captured the majority of the bullish move and might start closing their bullish position. This leads to a reduction in the number of overall buyers in the market and consequently a reduction in the bullish momentum.

The basic economic principles of supply and demand trading are the basics around which support and resistance are born from. A scenario where demand is greater than supply leads to a price rise and conversely a scenario where supply is greater than demand leads to a price drop.

Support is usually the level at which the price is deemed too low and thus demand increases and supply decreases. Similarly Resistance is the level at which price is deemed too high and thus supply increases and demand decreases.

Understand the market sentiment behind demand and supply of the security being traded will prove to be a huge boon when it comes to trading.

The methods of finding supports and resistances can be seen as an artform. In essence we mark spots on the chart where price action has previously stopped , slowed down or stopped during either an uptrend or a downtrend. 

The more recent these levels of support or resistance have come into play the better they are as indicators of price action. If price has recently obeyed the levels of support and resistance then the likelihood of it obeying the same level once again is higher.

Support and resistance levels can be found across several timeframes from as small as a 1 min timeframe or as long as a weekly timeframe. However it is important to keep in mind that the longer the time frame the more powerful and trustworthy the levels of support and resistance are.

A trader should keep in mind that support and resistance levels are not exact in the sense that traders should not wait for price to exactly hit the aforementioned levels and then immediately be bullish when the trend has been bearish hence far. Price can sometimes break past a level of resistance indicating a bullish continuation only for it to reverse shortly after. In this sense a trader should be flexible and not rigid in his understanding and implementation of support and resistance.

A good practice is to think of these levels of support and resistance as zones or areas rather than a strict line representing an exact price. Mastering this is key to perfecting support and resistance trading.

Axe Trader promotes methods which have stood the test of time and proven themselves as reliable and consistent. Basically every single profitable and successful trader has used support and resistance levels in some way , shape or form. Support and Resistance levels are based on core economic principles which can act as an added level of confidence in their merit.

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