had closed below the.4700 support level but ended up rising back up above. In this lesson, we will learn all about candlestick patterns and how whole sequences of candles can form shapes or patterns that suggest both what markets are feeling about a given currency pair, and where price is likely to go in the future. There is no definite answer to this question. Now heres the issue if you had sold, you would have been faked out. This might make it much easier for this particular concept. With a little practice, youll be able to spot potential forex support and resistance areas easily. At those times it seemed like the market was breaking support.
This can certainly confuse traders who are completely beholden to a certain number, and this is where emotions come in, where you have to decide whether the market is really just testing a level or whether that level is about to break, whether its. If you had believed that this was a real breakout and sold this pair, you wouldve been seriously hurtin! Look at where the price starts creating certain valleys and peaks, and you can come up, on a line chart, with some helpful support and resistance zones. Of course, this is all overwhelming at first, but the experienced trader will be able to recognize these patterns, and keep his emotions in check while he waits for a rebound, or knows that a currency is just testing support rather than breaking. In this way, resistance and support are continually formed as the forex market oscillates over time. Notice how the shadows of the candles tested the.4700 support level. One thing to remember is that support and resistance levels are not exact numbers.