Supply and demand are the very determinants of price - any price. This applies to everything from your local farmers market, to a rare, one of a kind jewel, to the foreign exchange market. Traders that understand the dynamics of demand and supply are better equipped to understand current and future price movements in the forex market.
Supply and demand and support and resistance have a lot of similarities, but the aim of this page is to distinguish the two and identify how you can use support and resistance to trade supply and demand.
Support and resistance is a powerful pillar in trading and most strategies have some type of support/resistance (S/R) analysis built into them. Support and resistance tends to develop around key areas that price has regularly approached and rebounded thereafter. This article explains what support and resistance is and covers top support and resistance trading strategies.
Professional forex traders and market makers use pivot points to identify potential support and resistance levels.
Simply put, a pivot point and its support/resistance levels are areas at which the direction of price movement can possibly change.
The reason why pivot points are so enticing?
It’s because they are OBJECTIVE.
Unlike some of the other indicators that we’ve taught you about already, there’s no discretion involved.
“Support and resistance” is one of the most widely used concepts in forex trading.
Strangely enough, everyone seems to have their own idea of how you should measure support and resistance.
Let’s take a look at the basics first.