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What is forex trading support and resistance strategy?

Forex trading support and resistance strategy is a popular technique used by traders to analyze and identify potential trading opportunities in the foreign exchange market. This trading strategy is based on the concept of support and resistance levels, which are key price levels that the market tends to respect and react to.

Support and resistance levels are horizontal lines that represent the price levels at which the market has previously shown support or resistance. Support levels are price levels at which the market has previously shown buying pressure, and resistance levels are price levels at which the market has previously shown selling pressure.

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Support and resistance levels are important because they provide traders with key information about where the market is likely to turn around or continue moving in the same direction. When the market reaches a support level, it is likely to bounce back up, and when it reaches a resistance level, it is likely to fall back down.

Forex traders use support and resistance levels to identify potential entry and exit points for trades. When the market reaches a support level, traders may look for buying opportunities, and when it reaches a resistance level, they may look for selling opportunities. This strategy can be used in both short-term and long-term trading.

There are several different methods for identifying support and resistance levels, including chart patterns, trend lines, moving averages, and Fibonacci retracements. Traders may use one or more of these methods to identify key support and resistance levels.

Chart patterns are a popular method for identifying support and resistance levels. These patterns are formed when the market reaches a certain price level and then bounces back in the opposite direction. Some common chart patterns include double tops, double bottoms, head and shoulders, and triangles.

Trend lines are another popular method for identifying support and resistance levels. These lines are drawn on a chart to connect the high and low points of a trend. When the market reaches a trend line, it is likely to bounce back in the opposite direction.

Moving averages are a technical indicator that can be used to identify support and resistance levels. These indicators calculate the average price of the market over a certain period of time. When the market reaches a moving average, it is likely to bounce back in the opposite direction.

Fibonacci retracements are a mathematical method for identifying support and resistance levels. These levels are based on the Fibonacci sequence, which is a series of numbers that follow a specific pattern. When the market reaches a Fibonacci level, it is likely to bounce back in the opposite direction.

In conclusion, forex trading support and resistance strategy is a popular technique used by traders to analyze and identify potential trading opportunities in the foreign exchange market. This strategy is based on the concept of support and resistance levels, which are key price levels that the market tends to respect and react to. Traders use support and resistance levels to identify potential entry and exit points for trades, and there are several different methods for identifying these levels, including chart patterns, trend lines, moving averages, and Fibonacci retracements.

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