Support and resistance are one of the most popular tools that any trader can use to find the possible upcoming bullish and bearish trends. however, I have seen many traders struggle to find the best levels and which results in wrong trading decisions and bad trades.
What is the Support and Resistance level?
Support and resistance are manually drawn levels by the traders. These levels are the key price areas from where the price is certainly going to bounce back up or down. increase or decrease in price is due to supply and demand when the demand is greater than supply the price rises and is assumed to keep rising until it reaches the resistance level and vice versa when the supply is greater than demand the price is likely to fall until it reaches the support level.
Pros of Support and Resistance level
- Technical analysts use support and resistance levels to identify the upcoming possible bullish and bearish trends.
- Support and resistance are considered very powerful levels as they can give you proper entry and exit points.
- The Support and Resistance can be combined with any technical indicators like RSI, Stochastic and more which makes this indicator more effective and powerful.
Cons of using Support and Resistance
- You need to be very careful while drawing support and resistance levels. drawing a wrong level can result in bad trading decisions and wrong trades.
How to draw Support and Resistance levels on the IQ Option?
Now, click on the pencil icon and click on the horizontal line twice from the menu.
Lastly, place the horizontal line below the two lows for the Support level and similarly place one more horizontal line above the two highs for the Resistance level.
You can also change the colour of the two lines. just click on the setting icon and select the colour option to change the colour.
How to trade with Support and Resistance levels on IQ Option?
Trading with the Support and Resistance levels is very easy. you just need to remember the golden rule of the indicator.
When the price or the candle is near the support it indicates an upcoming bullish trend and here we can place a buy trade.
Similarly, when the price or the candle is near the Resistance level it indicates an upcoming bearish trend and we can place a sell trade here.
So, this is the whole concept of Support and Resistance. you might be wondering. what is the logic behind placing buy and sell near the two levels? well, when the price is near the support level it means that the fall in the price is likely to stop and the price is going to bounce back up near the Support level similarly, when the price hits the Resistance level it means the rise in the price is likely to stop and the price is going to bounce back down near the level.