What are Support and Resistance Indicators? And what are the benefits?
Support and resistance indicator are technical analysis tools used to predict where prices will tend to continue the trend (breakout) or reverse direction (reversal). Several points of the resistance indicator area that broke indicate a high volume price movement.
Support and resistance indicators are one of the most widely used techniques in technical analysis, based on concepts that are easy to understand but difficult to master. support and resistance identify the level of price values in historical prices. There are numerous methods that can be made use of to determine assistance and resistance levels.
What Are Support And Resistance Indicators?
Support is a line on the movement of stock prices, support can be referred to as the “lower limit” of the stock price that cannot be broken. The support line is often used by stock investors to start buying stocks that have touched the support line. The decision to buy, assuming that the stock price does not fall lower than the support line, will rise again.
If support is the lower limit of the stock price. So, resistance is the upper limit. Resistance is an indicator for stock investors to sell stocks whose prices have touched the resistance line.
You also need to know, that support and resistance are often drawn using lines. It can be horizontal, slanted, or curved. Later we will discuss. It was meant to make it easier to draw.
Benefits Of Support And Resistance Indicators
If you are a trader, of course, you often hear about the benefits of support and resistance to technical analysis. In essence, support and resistance are often used by some traders to find out the current price level. On the other hand, support and resistance are also known as a strategy to see the market value.
By using this support and resistance, traders will get benefits that are not obtained with other analyzes. However, when you are a novice investor and are still beginning to use support and resistance analysis, support and resistance analysis is quite easy to apply and use.
The benefits that a trader will get when using this support and resistance indicator are:
1. Knowing The Occurrence Of Trends
The first benefit of support and resistance indicators is that support and resistance are often used to indicate a trend. This trend will generally exist when the price in the market begins to penetrate one of the boundaries in the market.
2. Make It Easier To Determine The Entry Position
The next benefit of support and resistance indicators that traders will get is that each trader will easily determine the entry position in the market. Usually, this position is determined by closing the market price above the support and resistance lines.
In addition to the two benefits above, we can use support and resistance by taking Profit or Stop Lost positions for more information at the traders union.
Although many methods can be used to determine the level of support and resistance indicators, without regular practice a trader will not be able to place support and resistance points properly and correctly.