How do we determine support and resistance points?

Support and resistance points are important concepts used in financial markets to analyze price movements and create trading strategies. Support and resistance are based on the assumption that the price of an asset usually has a certain reaction when it reaches certain levels.

1 Chart Analysis: Line Charts and Candlestick Charts: It is possible to determine support and resistance points by examining charts showing the price movements of stocks or other assets.
Trend Lines: Trend lines can be drawn to determine the general direction of the price. A trend line is a general indicator of the path the price follows as it rises or falls.

2 Previous Tops and Looking at the Bottom: Previous highs and lows can be used to determine support and resistance levels. Previous highs can be considered resistance points, while previous lows can determine support points.

3 Volume Analysis: Analyzing volume along with price movement can help identify support and resistance points. Increasing volume, especially when approaching support or resistance levels, can indicate that these levels may be strong.

4 Fibonacci Retracement: Fibonacci retracement levels can be used to identify retracement levels following a decline or rise in price. These levels can define support and resistance points.

5 News and Events: Economic news and events can affect support and resistance levels. Important economic data releases or political events can cause significant price movements in the market and lead to the formation of new support/resistance levels.

6Moving Averages: Variants of moving averages can be used to determine the trend and identify potential support/resistance levels. In particular, an asset price can act as support or resistance when it approaches a certain moving average level.

Identifying support and resistance points is important for understanding the price movements of an asset and creating trading strategies. However, these methods of analysis may not always provide accurate results, so it is important to always consider risk management.