Trending markets are identified by using swing points patterns, broken down into higher highs, higher lows, lower highs and lower lows. These key points are called swing highs and swing lows and the order they form in can help identify trends, especially in their early stages.
During a bullish trend, price steps upward in a zig zag type pattern. Price will gradually step its way higher forming a staircase look on the chart. Higher highs (or swing highs) in bullish trends is where the market finds resistance, then higher lows (or swing lows) is where the market finds its footing back on support for trend momentum to kick back off from and move into the next higher high. During a downward bearish trend, the opposite is true
Nearly every single technical trading system will rely on you the trader having the ability to correctly draw support and resistance levels on your chart. Mapping out support and resistance is really the most important core skill any serious traders will need to have a good grasp on. If you can’t draw your support and resistance then your trading as a whole will implode on itself. It’s really important you master the skill of identifying support and resistance level to build a good foundation for your success as a trader. The issue most traders have with the whole process is they tend to over complicate it all and are just left with a very messy, confusing, hard-to-read chart. Sound familiar?
We will give you a good idea on how easy it is to keep your charts clear and using a simple approach. We’re going to start from the beginning and talk about how to identify support and resistance levels that actually matter and the ones that don’t.
An architect draws up plans for a new building. But he graffitied the blueprints with scribbles and smudge marks, making it barely readable. The actual builder who has to work off those designs is going to have a very difficult time constructing the building the was it was meant to be. The same analogy applies to your trading.
Support and resistance levels are proven price areas where buyers and sellers find some form of equilibrium and generally a shift of power between buyers and sellers occur that creates the ‘price reversal’. Therefore Support and Resistance are the key turning points in the market. Price doesn’t move in straight lines as you are no doubt well aware of.
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