Educational Zone

Determine Trend

The easiest way to look at the price oscillation and determine whether the trend up , down or sideways, to make the investment decision with ease , is to look at peaks and troughs on the price chart  , if the current peak is higher than the previous peak and the current trough is higher than the previous trough , the trend must be an upward trend, and vice versa, if the current peak is lower than the previous peak and the current trough is lower than the previous trough, the trend must be downward , and if the peaks and troughs approximately at the same level the trend must be sideways.

Peaks and Bottoms ( Resistance and Support )

When prices start to rise reaching a point and then reverse down from this point , the highest point in this rise is called a peak and this peak represent a resistance level,  this resistance show that the sellers control the market at this price point and they become  more dominant and be able to drive prices down from this peak or resistance .

When prices start to decline and reaching a point and then prices reverse upward again  from this point , the lowest point in this decline is called a bottom and this bottom represent a support level , this support show that the buyers control the market at this price point and  they become more dominant and be able to drive prices up from this bottom or support .

Reversal role of support and resistance

The idea behind of support and resistance ,  that prices will  try to stop at this record values in the future , or prices broke them up or down  and this what called the break out of resistance and support causing reversal or shift in the trend , and once they are broken they will switch there function to what is called ( reversal role of support and resistance ) and previous resistance price become the potential support price the price now and vise versa , when the support broken down it will become the nearest barrier and  resistance now for the prices .