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Independent Study Using Support and Resistance 2
Independent Study Using Support and Resistance 2
| Using Support and Resistance 2 |
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Using Support and Resistance 2 Because we haven’t yet talked about the various indicators available to currency traders, I risk introducing something that may confuse you. However, I feel it’s important enough to know how most traders use Support and Resistance, and that is in conjunction with a secondary indicator. As shown in Using Support and Resistance 1, we expect reversals and breakouts to happen and support and resistance levels, but how can we start to fine tune what we expect to happen. We can use other indicators to do that. Because the MACD is a fairly popular indicator that most people have heard about, let’s use that.  In the example above, previous resistance at A is seen again at B, leading to a crossover of the MACD at E. We can then assume that a return to the support line of C could take place. Also notice that a new high was shown on the chart from A to B but line D was sloping down. This is phenomena known as divergence (more about that later).  The above example again, shows divergence using different indicator called the RSI. Can you find the support and resistance area when price could be expected to go? |