Just what support and a level of resistance level?
A support level is a price level where the cost is likely to turn around after a short or a long move to disadvantage. A resistance level is a price level where the price has a high chance to modify the direction after a brief or a long move to a positive. Distinct types of support and levels of resistance are present: IT Support
1/ Static support and resistance levels.
2/ Variable support and resistance levels.
3/ Psychological support and levels of resistance.
Fixed support levels are before support and levels of resistance that are below the present price level. Static levels of amount of resistance are earlier support and resistance levels that are over a current price level. Both static levels are fixed price levels, and they do not change. A static level drawn on a time frame will stay the same on all the other time frames. Traders can always refer back to these static levels in the future, by drawing them on their chart. Fixed levels are drawn on all time frames. Nevertheless static levels from the daily, weekly and regular monthly chart carry more weight than those drawn on the intraday timeframes. The higher the time shape, the larger the importance. Each year chart static levels are more important than quarterly chart static levels and monthly static levels are less important than quarterly static levels.
Dynamic support and resistance levels are moving support and amount of resistance levels. They change constantly over time and are positively correlated to the price. They vary from once frame to another. Examples of dynamic levels are moving averages, Bollinger bands, Keltner channel, standard error bands, Starc groups, standard deviation bands, moving average envelopes. Dynamic support level becomes a powerful resistance level when the purchase price drops below it and a dynamic resistance level usually acts as powerful support level when the price goes above it and finds support. Basic or exponential moving takes up such as: ten, 20, thirty, fifty and two hundreds are generally used as dynamic levels on all time frames. Much like the static levels, the greater the time frame, the higher the value.
Emotional support and levels of resistance are critical stationary support and resistance levels. These are thin plunging lines between the bulls and the bears. Internal price levels influence traders’ sentiment. When the price is above an emotional price level, the emotion is bullish, however as soon the price passes across under the psychological price level, the sentiment becomes bearish. They are tough trading areas as the bulls and the bears value the other person territory. When the price is above the psychological price level, the bears do not care to trade and the price is fully handled by the bulls but as soon as the cost passes across back below the internal price level, the bulls do not interfere until it finally crosses again above the psychological price level. A psychological support level is the internal resistance level depending on price. If the price is over a psychological level, the psychological price level becomes a psychological support level and when the cost goes below it, it is a psychological resistance level. Recently, 8100 and 8300 have been powerful emotional levels for USDJPY foreign currency pair. In reality, price rarely stop at a single price level but can dip below or above a level before turning around. For better “trading” results, it pays to to consider these levels as zones. Instead of static, dynamic, psychological levels, it will be stationary, dynamic, psychological zones.