There are basically two types of markets depending on their behavior. Each type of market should have its own strategy and is one of the most common mistakes many investors want Tranzas Forex markets with the 2 same strategy.
Market Trend No
Trending market (the High or Low – bullish or bearish)
There are two basic concepts that can be applied in any of the above two markets.
Support and Resistance
Support can be defined as the “ground” or “floor” in which a couple has difficulty crossing down.
Resistance is the opposite concept: The ceiling or upper limit in which a couple has difficulty pass up.
So then I show him the support and resistance levels of the markets with and without trend. You see, the concepts apply to both types of markets:
So the strategy should be applied in this market, obviously in its most simple, is: Buy at support levels and sell at resistance levels …. But do not worry …. Not so fast. It’s not so easy.
It is extremely important to mention the fact that on average, markets are no tendency for 80% of the time. This is why it is extremely important to have in their arsenal, a strategy for this market.
The strategy should be applied to this kind of market trend is somewhat the reverse of the previous strategy: buying up the levels of resistance and sell below support levels.
It is also very important to say that in a market downtrend, resistance levels are more important, while in trending markets on the rise, the levels of support are most important when analyzing the tables and take decisions.
It is also important to mention that there is no exact formula of how to draw lines of support and resistance. Some investors prefer to connect only Forex bodies of the candles and exclude the high and low shadows or wicks, while others do the opposite: They connect the ends of the shadows or wicks even peak out of the ordinary. What matters is that you must also use logic. That is if the trend lines and support are not real or valid, the more certain is that they are not, and possibly other investors are thinking the same thing and using the same analysis tables.