Support and resistance is not something new in the world of trading. The concept is used as an indicator to predict various stock market fluctuations. Ko hono moʻoní, the concept has a lot to do with the theory of supply and demand. Most charts look like exhibiting random price patterns, but when the theory of support, or of resistance, is applied, very often the price fluctuations on such charts no longer seem random.
Personally, I began to notice a trend similar to this when I watched stock ticker. Sitting in front of the TV, watching stock ticker, over time it occurred to me that certain price points of Down Jones Industrial Average had a bit of difficulty trying to break through other levels. Moreover, when round numbers were involved and the prices attempted to move, the forex trend became even more obvious.
When market prices fluctuate and continue to rise, generally there occurs a certain point which seems too high to most traders. When such a price point is reached, most buyers refrain from acting. This concept is generally referred to as resistance. Under normal trading circumstances, a price that is regarded as resistance point often receives at least 3 hits! Sometimes, the hits can be quite close to the actual resistance point, but not as high as the point itself.
ʻOku ʻi ai ha fakakaukau tatau ʻa e poupou ki he fakafepaki, ka ʻoku fakahaaʻi ʻe he poupou ʻa e ngaahi meʻa mahuʻinga ʻoku ʻikai lava ke toe ʻalu hifo. ʻOku, ʻi he taimi ʻoku hokohoko atu ai pe ʻa e holoa ʻa e totongi, ʻi ha tuʻunga ʻe niʻihi, mahalo ʻe kamata ke fuʻu lelei ʻaupito ʻa e totongi. ʻOku hange ia ha falekoloa suu ʻoku ne fai ha fakatau lahi! Neongo ʻoku lolotonga fai e fakatau, ko e angamaheni ʻoku lahi ange ʻa e kau fakatau ʻoku haʻu ke fakatau ʻa e koloa. ʻOku tatau pe ia mo e ngaahi meʻa ʻoku hoko ʻi he maketi fefakatauʻaki. Fakatokangaʻi ange ʻa e poupou ko iá, pea pehē ki he fakafepaki, ʻoku tui ʻoku malohi ʻi he taimi ʻoku lahi ai e ngaahi meʻa ʻoku hoko ʻi he tuʻunga ʻo e totongi.
While the concept of support, or of resistance, is quite a good indicator to gauze the potential of the market at any given point, not everyone has enough knowledge about it. Stock trading can be a bizarre thing to deal with, at times. That is why sometimes, no solid proof or evidence may exist about support and resistance, and yet people may believe that the points exist. In such a scenario, the market can often reverse direction totally. That is to say that more often than not, rumors seem to have much stronger effect on forex trading than actual announcements that bear significance.