Monday, March 28, 2016

What is Resistance in Forex Trading?

Just like when you’re learning a new language, being a newbie in forex trading means that you have a lot of forex trading terms you’re unfamiliar with. But that won’t be a problem, because our educational articles will help you to easily understand most of these unfamiliar words.

Resistance is the price level in which the security has refused to increase in price and starts decreasing rather. Think of it like a barrier, the price is trying to get past it, but it still prevents the security’s price from going higher, and therefore pushing it down instead. 

The good thing about resistance level is they are quite easy to be distinguished, and it often does not require high levels of expertise in chart analysis. Therefore, even a beginner trader can easily identify resistance levels. 

Resistance levels can appear at the exact same price numerous times, but keep in mind that it’s not always the case. Oftentimes, the resistance levels occurs at slightly different prices, which creates what traders call as “resistance zone”.

For example, if the price refuses to go beyond $5 and starts pulling back once it reach the price level of between $5 and $5.10 in multiple trades, then the resistance level isn’t just $5, but the area between $5 and $5.10 is the whole resistance area or “zone”.

You should also remember that the barriers caused by resistance levels will not remain permanently, so your most important job would be to determine which levels are more likely to remain and which are about to break resistance. With proper understanding of the market and the help of technical analysis, you will be able to easily distinguish these more accurately. 

Learn more about forex trading and further understand what is forex by reading our educational forex blogs. See who the best forex brokers are, visit to find out :)

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