The candlestick trading bible

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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58
THE CANDLESTICK TRADING BIBLE 
Support and Resistance levels 
Support and resistance are proven areas where buyers and sellers find 
some of equilibrium, they are major turning points in the market. 
Support and resistance levels are formed when price reverses and 
change direction, and price will often respect these support and 
resistance levels, in other words, they tend to contain price movement 
until of course price breaks through them. 
In trending markets, support and resistance are formed from swing 
points. in an uptrend the previous swing point acts as a support level, 
and in a downtrend the old swing point acts as a resistance level.
See the example below to learn more

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59
THE CANDLESTICK TRADING BIBLE 
The illustration above shows how the previous swing point acts as a 
support level after the breakout. 
When the market makes the retracement move it respects the 
previous swing point (support level) which will represent the beginning 
of another impulsive move.
As you can see, when the market tests the previous swing point 
(support level) it goes up again. 
By drawing a support level in an uptrend market, we can predict when 
the next impulsive move will take place.
Let’s see another example of a downtrend market. 
The illustration above shows us how the market respects resistance 
levels, when price approach the previous swing point, (resistance 
level).

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