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Support and Resistance

This is a very simple pattern. You draw a line on a chart and look where price touches the line and afterwards rises in case of support or falls in case of resistance.

Visual Pattern

The Support Line indicates where price will move towards and rises afterwards of touching.
The Resistance Line indicates where price will move towards and falls afterwards of touching.

Interpretation

First you need to establish at least two points of support or resistance for a support or resistance line to work. The next time price touches that line it is more probable that the behavior of the price will match that of the previous times it touched it.

Buy Signal

When price touches the Support Line, it gives you a Buy Signal.

Sell Signal

When price touches the Resistance Line, it gives you a Sell Signal.

Reducing Risk

You can reduce risk by getting 3 or more evidence touches of a line, before you use it to trade.

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