Pivot point articles forex
Support A support level is the price at which buyers are expected to enter the market in sufficient numbers to take control from sellers. When price falls to a new Low and then rallies, buyers who missed out on the first trough will be inclined to buy if price returns to that level. The result is a rally, reinforcing perceptions that price is unlikely to fall further and creating a support level. Resistance A resistance level is the price level at which sellers are expected to enter the market in sufficient numbers to take control from buyers. When price makes a new High and then retreats, sellers who missed the previous peak will be inclined to sell when price returns to that level.
Afraid of missing out a second time, they may enter the market in numbers sufficient to overwhelm buyers. The resulting correction will reinforce market perceptions that price is unlikely to move higher and establish a resistance level. Point and figure charts are useful for identifying support and resistance levels. Role Reversal Support levels, once penetrated, frequently become resistance levels and vice versa.