36# Tutorial Support and Resistance

Support and Resistance Lines

True Support and Resistance Submit by Joy22 01/06/2012

Support and resistance lines are one of the basic tenants of technical analysis. The method normally used for establishing support and resistance is by finding high and low price levels that the market has failed to exceed previously.

However, this technique has certain failings. One of the more common has to do with the occurrence of what is called "false breakouts". Quite often the market will just exceed the resistance or support lines and return, fooling a large percentage of traders along the way.

Obviously, such lines are important, but they normally are not the true support and

resistance lines. This statement may seem strange, considering how pervasive the thought that these lines are all important indicators of market direction. But these lines as static and the markets are anything but static.

So if these lines are not the true support and resistance lines, what is?

True support and resistance lines can more accurately be defined, “As lines that have established themselves with support and resistance within the flow of the market and are supported by price action (defined as the highs and lows touching and giving support to).” To help clarify this definition, lets look at some examples.

To see pdf file

In the pictures Tutorial Support and Resistance forex system in action.