Every Forex trader wants to trade to make money. Making money in the Forex Trading isn’t that easy because price of currencies keep moving in both upward and downward directions. Wise traders invest only if they feel secure to invest. Secure to invest means when the traders or investors are sure that price will not go less than the predicted price point. In the same way, traders or investors also feel secure to close their opened positions only if they are sure that the price will not move higher than the predicted price point. Such points are called Support and Resistance and every trader or investor should keep in mind the resistance and the support point for any currency pair while trading.

Support
The point that is predicted to be the lowest in a certain time period is the Support point. Support of any currency indicates the point below which the price of that currency has not gone. This minimum point is the support point in that time period.

Resistance
The price point above which it becomes difficult for the price of the currency to move is called Resistance of that currency. Resistance of a currency is the maximum price point for that currency in a certain time period. The support and resistance lines are shown in the figure below. The thick straight red line drawn at the upper side indicates the resistance line and the thick straight red line drawn at the bottom side indicates the support line.

If you start looking at charts, you will find that support and resistance points are not easily crossed. Traders and investors should set their entry and exit points based on the support and resistance points. Entry point should be set slightly above the support point whereas exit point should be set below the resistance point. Round number figures such as 19,000, 18,000 etc offer more resistance and support. Round figure numbers are also named psychological numbers because of the psychological effect that these numbers have on the trading behavior of the traders and investors.

Carefully studying the resistance and support of any currency in a time period helps the traders and investors to set successful entry and exit points. With the help of successful entry and exit points, traders and investors are able to close their opened position in profit.

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