SUPPORT AND RESISTANCE LINES
The financial markets have developed hundreds of analytical tools and instruments to recognize the market patterns properly and take advantages of it by anticipating the asset’s price movement. It recognitions allows stockbrokers to make an early trading movement and get the most profits from trading or investing.
What are lines?
The technical, financial analysis requires that traders review massive amounts of information in a very short period to keep them current and competitive. As a consequence, many tools have been developed and the easiest way to get a great deal of information, which can be read fast, consistently and accurately are the graphical representations or charts; price charts display the asset price during any studied period, and it can include many more data in it. In the same way, to increase the delivering information speed and its readability some lines are drawn on these charts with a color key and a uniform position on it. Therefore, lines connect or join two or more points or segments in a chart and represent a very specific parameter, e.g. a line is drawn at the open price of an asset during one week, or a line is drawn at the lowest price of an asset for any period. Each of them delivers faster the information and cover the preset parameter, series, and categories of it.
WHAT ARE SUPPORT LINE ?
The support line is the linear graphical representation of a price point (e.g. nominal value of X at 5.45 USD) at which an asset has not declined or fallen to get below it for a period of time. It is located in the lower part of a price chart. The support lines are also known as the asset’s floor because it metaphorically prevents that an asset price moved further downward. The concept behind it is that the support line resists or pushes back the asset price to prevent it from falling at or below it. The demand for an asset at that current level would keep the price above it. The support lines deliver big data in seconds such as the lowest recorded price of an asset for a period, the past, or the starting point of a price down trending, etc.
WHAT ARE RESISTANCE LINES?
The resistance line is the linear graphical representation of a price point (e.g. nominal value of X at 9.45 USD) at which an asset has not reached or fallen to get above it for a period of time. It is located at the Top part of a price chart. The resistance lines are also known as the asset’s ceiling because it metaphorically prevents that an asset price moved further upward. The concept behind it is that the resistance line resists or pushes back the asset price to prevent it from going beyond it. The demand for an asset at that current level would not be big enough to increase the price above it. The resistance lines deliver big data in seconds such as the highest recorded price of an asset for a period, the past, or the starting point of a price up trending, etc.
In a nutshell
The support and resistance lines are commonly used in technical analysis, and they are represented in almost all price charts. It used is standardized and globally recognized for any trader or investor. They allow traders to identify properly when a price trend or a price correction will take place.
Support and Resistance lines Indicator in IQ Option
To mark support or resistance line you have to click on graphical tools in left bottom corner and select horizontal line, after click on your chart (you can move line or delete too)