What is Support and Resistance Level?

Technical analysts use support and resistance levels to identify price points on a chart where

1. Buying force concentrates and exceeds selling force – Support level
2. Selling force concentrates and exceeds buying force- Resistance level

 

The support and resistance levels can be identified on charts using trendlines and moving averages based on the historic price movements.
In terms of technical analysis, the simple resistance level can be obtained by drawing a line along the highest highs for the time period being considered. In contrast, the support level can be obtained by drawing a line along the lowest low.

 

There are 2 scenarios that may happen when the price level,

1. Bounce; or
2. Break through

 

During the “Bounce”, investors usually:

• Buy when the price falls towards support.
• Sell when the price rises towards resistance.

 

During the “Break Through”, investor usually:

• Buy when the price breaks up through resistance.
• Sell when the price breaks down through support.

Please feel free to speak to us at bullioninsights@goldsilvercentral.com.sg or call us at +6562229703 to speak to our in-house analysts and they’ll be happy to share more with you!

Suzane