Support and Resistance in Trading

What is the primary concept discussed in the provided text?

What happens to the highest point reached before the price pulls back in a bull market?

What does a support level indicate?

What is the purpose of plotting support and resistance levels?

What is a 'bounce' in the context of support and resistance?

What do the shadows of candlestick charts often represent?

How can you determine if a support or resistance level is truly broken?

What is a common misconception about support and resistance levels?

What happened when the price closed below the 1.4700 support level?

What is the conclusion about the support level after the price had closed below it and then rose back up?

Why should support and resistance be thought of as 'zones' rather than concrete numbers?

What is the advantage of plotting support and resistance on a line chart?

Why do extreme highs and lows in candlestick charts sometimes mislead?

When plotting support and resistance, what should you look for on a line chart?

What will be covered in the next lesson?

What is the result of practicing spotting potential forex support and resistance areas?

Support and resistance are continually formed as the price moves up and down over time.
In a bull market, the highest point reached before the price pulls back is now resistance, indicating a surplus of sellers.
In a bull market, the lowest point reached before the price starts back up is now support, indicating a surplus of buyers.
The reverse is true during a downtrend.

There are two basic ways to trade support and resistance: "trade the bounce" and "trade the break".
The concept of "bounce" and "break" will be covered in more detail later.

Support and resistance levels are not exact numbers, but rather zones.
Candlestick charts can be misleading, as they show extreme highs and lows, which can be just "knee-jerk" reactions of the market.
Line charts are better for plotting support and resistance, as they only show the closing price.
Plot support and resistance lines around areas where the price forms several peaks or valleys.

There is no definite answer to whether a support or resistance level is broken.
Some argue that a support or resistance level is broken if the price can close past that level, but this is not always the case.
Support and resistance can be "breached" but only temporarily, and may still be intact and even stronger afterwards.
Thinking of support and resistance as "zones" rather than concrete numbers can help filter out false breakouts.