For price models, support and resistance are the most important concepts. These terms simply represent the tendency of a market to recover from the previous minimum and maximum values. Support is the market’s tendency to rise to a predetermined minimum. Resistance is the tendency of the market to fall from a Forex candlestick patterns predetermined high level. Indeed, market participants tend to judge subsequent prices against recent highs and lows.
However, three things are worth mentioning: support and resistance are not rigid rules but simply a common consequence of the natural behavior of market players.
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What happens when the market approaches recent lows? In short, buyers are attracted by what they consider cheap. What happens when the market approaches recent highs? Sellers are attracted to what they consider to be expensive or a good place to make a profit. Therefore, recent ups and downs are the criteria by which current prices are valued. There is also a self-fulfilling aspect to the levels of support and resistance. This occurs forex indicators because market participants expect some price movement on these points and act accordingly. Therefore, their actions can help the market to behave as expected.
Trend tracking systems try to use these moments when support and resistance levels collapse
Contradictory trading styles are the opposite of following the trend: they try to sell when there is a new maximum and buy when there is a new minimum.