Two of the most highly discussed technical analysis trading attributes are what are known as support levels and resistance levels. So what’s the big deal behind these two types of technical analysis, and why are so many people so interested in them?
Well, for starters support and resistance levels allow traders to see levels in the markets in which price has not been able to break out of, to the upside or downside. This gives them a clear picture that based on the past when price reaches either a support or resistance level it is likely to bounce off that level.
Here is an example of support and resistance levels as can be seen in binary options trading.
As you can see from the screenshot above, the two levels are clearly defined by price hitting the level and bouncing. You can see we had two points in which the price went up and stopped at a specific level thus creating a resistance level. We also had 4 points in which price came down and bounced, thus creating the support level. It’s actually quite simple.
This is basically all there is to support and resistance levels. They can be used on any time frame and are simply just a good tool to have handy for any binary options trader. These can especially be useful during night trading as the markets are much slower and often times end up playing back and fourth between these levels.