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Questions and Answers
What happens when a resistance level is breached?
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In the context of support and resistance, what does 'breached' refer to?
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What happens when a resistance level becomes a support level?
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What happens when a support level is breached?
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What happens when price encounters a previous support level after breaking through it?
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How are support and resistance levels depicted in the market?
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Why is understanding support and resistance crucial for trading?
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What is the main focus of the video regarding support and resistance?
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How are support and resistance levels explained in the video?
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What does the video use to identify support and resistance in action?
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What creates support and resistance zones according to the text?
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What is the impact of repeated bounces off a level?
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Why is it preferable to identify support and resistance levels with only a few bounces?
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What is the relationship between support and resistance and supply and demand?
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What is the impact of repeated bounces off a level?
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Why is it preferable to identify support and resistance levels with only a few bounces?
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What is the significance of the size of the candlestick that breached the resistance level in the second example?
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Why does the text advise caution in trading the support and resistance level in the first example?
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Explain the trading strategy discussed in the text when the price reaches a support level. What are the key actions and targets involved in this strategy?
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What should a trader do if the price breaches the support level after a buy trade has been initiated based on the support level holding?
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Why does the text advise against staying in a buy trade when the price breaches the support level, even if the stop loss has not been hit yet?
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If the price breaches the support level, the trader should stay in the buy trade and wait for the stop loss to be hit.
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The text advises manually exiting the trade and taking a loss if the support level is breached.
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The text suggests that breaching the support level negates the reason for initiating the buy trade based on the support level holding.
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What action does the text recommend if the price breaches the support level after initiating a buy trade?
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What is the trader's response to the price breaching the support level?
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What is the significance of the breached support level for the buy trade?
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What is the significance of a breached support resistance zone?
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What action does the text recommend if the price breaches the support resistance zone?
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What is the impact of a breached support resistance zone on the trade?
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Why does the text advise caution in trading the support resistance zone?
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What is the significance of respecting the support resistance zone as resistance?
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Explain two different methods discussed in the text for handling a trade when the price breaches a support resistance zone. What are the key actions involved in each method?
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What is the significance of respecting the support resistance zone as resistance in the context of the text?
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Why does the text advise against staying in a buy trade when the price breaches the support level, even if the stop loss has not been hit yet?
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What is the significance of respecting the support resistance zone as resistance?
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What is the impact of repeated bounces off a level?
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What action does the text recommend if the price breaches the support level after initiating a buy trade?
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Study Notes
Understanding Support and Resistance in Financial Markets
- The video is an introduction to support and resistance in financial markets by Cody Cell.
- Support and resistance are explained using the analogy of bouncing a ball between the floor and ceiling in a hallway.
- Support is a level in the market that has historically supported price, while resistance is a level that has historically rejected price.
- The video focuses on horizontal support and resistance.
- The concept of support and resistance is crucial for understanding price movement in financial markets.
- The video emphasizes that price is always moving between some kind of support or resistance.
- Real charts are used to identify support and resistance in action, using the example of EUR/JPY.
- The video demonstrates how to identify peaks as resistance and valleys as support on the price chart.
- The process involves circling areas of resistance and noting points where price found support.
- The video highlights the importance of understanding the concept of support and resistance for trading.
- The video encourages viewers to focus on the concept and how it applies to the specific example on the price chart.
- The video sets the stage for a series of videos on support and resistance in financial markets.
Understanding Support and Resistance Zones
- Institutional sellers have pending sell orders at 1360 to execute $20 billion worth of sales, split into separate orders.
- Support and resistance zones are created by the supply and demand resulting from these orders, allowing prediction of market movements.
- Resistance equals supply (sellers), while support equals demand (buyers), creating price movement.
- Repeated bounces off a level make it more likely that all orders have been filled, increasing the likelihood of the level breaking.
- Identifying support and resistance levels with only a few bounces is preferable to avoid entering trades when orders have already been filled.
- The common belief that more bounces confirm a level is incorrect and leads to losing trades.
- When orders at a demand zone are completely filled, price may fail to reach the supply zone and reverse, as there are no more orders to push it up.
- Understanding the concept of support and resistance helps traders have confidence in their trading decisions.
- It is important to consider the dynamics of supply and demand in the market when identifying support and resistance levels.
- The presence of institutional sell orders and their impact on market dynamics is crucial in understanding support and resistance zones.
- The concept of supply and demand creating support and resistance levels is fundamental to accurate trading decisions.
- Traders should focus on identifying levels with fewer bounces to increase the likelihood of successful trades.
Understanding Support and Resistance Zones
- Institutional sellers have pending sell orders at 1360 to execute $20 billion worth of sales, split into separate orders.
- Support and resistance zones are created by the supply and demand resulting from these orders, allowing prediction of market movements.
- Resistance equals supply (sellers), while support equals demand (buyers), creating price movement.
- Repeated bounces off a level make it more likely that all orders have been filled, increasing the likelihood of the level breaking.
- Identifying support and resistance levels with only a few bounces is preferable to avoid entering trades when orders have already been filled.
- The common belief that more bounces confirm a level is incorrect and leads to losing trades.
- When orders at a demand zone are completely filled, price may fail to reach the supply zone and reverse, as there are no more orders to push it up.
- Understanding the concept of support and resistance helps traders have confidence in their trading decisions.
- It is important to consider the dynamics of supply and demand in the market when identifying support and resistance levels.
- The presence of institutional sell orders and their impact on market dynamics is crucial in understanding support and resistance zones.
- The concept of supply and demand creating support and resistance levels is fundamental to accurate trading decisions.
- Traders should focus on identifying levels with fewer bounces to increase the likelihood of successful trades.
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Description
"Support and Resistance in Financial Markets: An Introductory Overview" - Learn the fundamental concepts of support and resistance in financial trading. Understand the significance of these key levels and how they appear in real market scenarios. Ideal for beginners looking to grasp the basics of technical analysis.
