Support & Resistance Levels
This is one of the most widely used concepts in xagusd trading and it refers to levels on a silver chart that tend to act as barriers that prevent the xagusd price of an asset from getting pushed beyond a certain point in a particular direction.
Support
This level prevents the xagusd price of an asset from getting pushed downwards and therefore it is regarded as the floor because it prevents the xagusd trading market from moving downwards past a certain point.
Example:
On the xagusd trading example explained and shown below you can see that xagusd price moved down until it hit a support
Once xagusd price hit this level it slightly bounced back up, then resumed going down until it hit support again.
This process of hitting a level & bouncing back is called testing the support.
The more times a support is tested and the xagusd trading market bounces up the stronger it is - the xagusd trading example explained and shown below this level was tested three times without breaking. Finally the xagusd trading market silver trend reversed and started moving in the opposite direction.
Once this level has been determined traders use it to place their silver orders to buy silver at the same time putting a stop loss a few pips below it.
In the xagusd trading example above the xagusd trading market did not move below this area. It is an area where xagusd price cannot break lower.
These regions form good points where xagusd price trend in a downward silver trend is likely to reverse and get support and start moving upwards.
The demand to buy silver at this point will be greater and therefore providing a good point to begin a buy silver trade, while placing stops some pips just below.
This support is also use by short silver sellers as a target where to set their take profit for their short sell xagusd trades.
This is another reason why the silver trend is likely to reverse or consolidate at this level because once the sellers close their sell xagusd trades then momentum of the downward silver trend reduces and a consolidation will happen after which the direction is likely to reverse.
Resistance
This level prevents the xagusd price of an asset from getting pushed upwards these levels are therefore regarded as the ceiling because these levels prevent the xagusd trading market from moving upwards
Example:
On the xagusd trading example explained and shown below you can see that xagusd price moved up until it hit a resistance.
Once xagusd price hit this level it retraced slightly the resumed going up until it hit the resistance again.
The resistance holds & is tested five times without breaking.
More times a resistance area is tested the stronger the it is.
Once this level has been determined traders put their silver orders to sell at this level & at the same time putting a stop loss a few pips above it.
In the xagusd trading example above the xagusd trading market did not move above this area. This region shows an area where xagusd price cannot break above.
These levels form good points where a xagusd price in an upward silver trend is likely to reverse after some resistance and start moving downwards in the opposite direction.
This shows that the demand to sell silver at this region will be greater & therefore providing a good point to start a sell silver trade, while placing stops some pips just above this level.
This resistance level is also used by buyers as a target where to set their take-profit orders for their bullish trades. T
His is another reason why the silver trend is likely to reverse or consolidate at this level because once the buyers close their sell xagusd trades then momentum of the upward silver trend reduces and a consolidation will happen after which the direction is likely to reverse and start moving down.
