3.1 Support and resistance lines explained Video Lecture - Forex Learn

welcome back to capex forex trading comm
in today's lesson we're going to focus
on two very important subject areas
called support and resistance lines so
let's focus on the support line first so
by definition a support line is a
horizontal line that reverses a current
down trend back up in an upwards
direction so what we've got in front of
us here is a downtrend the actual size
of the downtrend does not matter but
what you can see in the cluster of
candles here is that the downtrend fails
to continue downwards and instead it
bounces back up in an upward direction
so if I take a horizontal line and join
the lows of that cluster of candles you
can see that that line has not been
penetrated by the downtrend and in fact
that line is the reason why the trend
has bounced back up in an upward
direction now in order for this line to
qualify as a support line it needs to
have two or more hits so we've got hit
number one hit number two at this point
it qualifies as a support line and all
you're waiting to see is how the
downtrend will retest that horizontal
line so we've got a retest here and a
retest here and the down tread or the
pressure from that down trade failed to
penetrate that line yet again and
instead is bounce back up in an upwards
direction so this here is a standard
support line now in terms of a
resistance line the opposite occurs so
by definition a resistance line is a
horizontal line that reverses a current
uptrend in a downwards direction so what
we've got here is an uptrend and again
the size of that uptrend does not matter
but what we can see here is a cluster of
candles where an uptrend has failed to
continue in an upwards direction and
instead is reversed back downwards so if
I take a horizontal line and join the
highs this time of that uptrend you can
see that this horizontal line has not
been penetrated and as before in order
to qualify as a resistance line it needs
to have two or more hits
so we've got hit number one hit number
two this also qualifies as a hit because
it's quite close but on this area here
we can see that there is a much more of
a conformation where the line is again
failed to be penetrated and instead it
bounced back down in a downwards
direction so that is a resistance line
now what we also need to discuss a two
is a rule called the change of polarity
rule where basically a support line
becomes a resistance line or resistance
line becomes a support line so let's see
how a resistance line can become a
support line so we've got an uptrend
here where it failed to continue back
sorry it failed to continue to go in an
upwards direction and instead it
reversed slightly so if I take a
horizontal line and join the highs of
that upper trend we can see we've got
one hit to hit there now after the
reversal the trend regained its strength
and continue to go back in an upward
direction and it penetrated the original
resistance line after the penetration it
came back to retest this line and to
shoot back up in an upward direction but
it is this retest from an upwards
position that now turns this original
resistance line into a support line okay
so we've got an original resistance line
at this point but because of the retest
after the penetration here the retest in
this area it's now called a support line
and the same happens the other way
around
so what we've got in this area here is a
downtrend and this downtrend creates a
support line and we've got one to three
hits then the trend line sorry the
horizontal support line is penetrated in
this little area and it's retested not
once but twice in this example once
there twice there by those highs there
so in this example the original support
line it now becomes a resistance line
despite the fact that it didn't continue
to go back downwards the retest
qualifies it as a resistance line
okay guys so that's it for this lesson
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any questions we will do our best to
answer them for you
and we shall see you for the next video