Support (Support) - a price level chart, in which the prices to some extent controlled by buyers (bulls or another bullish trend ), and prevent further downward movement. It is a kind of line being done on the basis of previous price movements. When the price approaches the line starts mass buying currency and starts to work pending orders many traders (usually due to automated trading systems ), which begins to affect the price and then (in most cases) the price starts to move up again to what- a period of time. This is due to the fact that demand outweighs supply, and to prevent further price drop. That is, the traders themselves and investors massively regulate the movement.
Resistance (Resistance) - a price level chart, in which prices are controlled to some extent by sellers (bears, or otherwise, bearish trend), and prevent them from moving up. This level is also a certain line, which is based on previous price movements. When the price approaches the line, begins massive sales of foreign currency, and also begin to operate pending orders many traders, that begins to affect the price and then (in most cases) the price starts to move down again at some time. This is due to the fact that the supply outweighs demand, and prevent further price increase.
Points of support and resistance are the most intense places of intersection of supply and demand, which have large amounts of energy and movement. Usually, depending on the direction of the trend, the approach to support / resistance means less volume of purchase or sale. For example, when the bull market, the approach to the support line, usually the volume of buying currency increase, and, therefore, reduces the volume for sale. Conversely, in a bearish trend when approaching the line of resistance, the volume increase in the sale and purchase reduced.
The unit price breaks may not be characteristic of a particular situation in the market, and it could be based on a news data or strong inertia of the market. And if there is congestion pricing, it says the criticality of the data subject, and a reversal of support / resistance, which is the border of the price channel .
In cases where the resistance is broken through, it automatically becomes a support level. That is, the trend is changing, and should analyze the situation with the new provisions of the market. Conversely, if the level of support breaks, it becomes a resistance level.
Sometimes there are moments that support line hard to determine precisely. Or is that the price falls below the support line, but it will not be deemed to have broken the support line, if the price started to move up again. This usually use Fibonacci levels , or about 5% of the possible penetration of the level of prices.
Based on the line supports / resistance built many graphic trading strategies. These are the building as: "Triangle", "double top", "Triple Top", "head and shoulders", "pennant", "diamond", "flag", "Clean", "double bottom", "triple bottom ".