Support and Resistance Indicator

support and resistance indicatorAs a binary options trader, your best plan of attack is to get familiar with some of the more basic charting patterns you may see as you’re browsing the charts, looking for entry points.  These patterns or indicators are what financial traders and economists refer to as technical analysis.  To make it even more simple, think of the financial world as a car.  If you were to pop open the hood for a look at all the moving parts, that would be the ‘technical analysis’ aspect to it.

There are hundreds of indicators, patterns and tools that financial traders use.  In fact, we should probably stop selling it short and tell you there are thousands.  Some are incredibly complex and require some serious thought while many others are simple enough to grasp the basic purpose.  The Support and Resistance Indicator is one of the easier charting patterns that traders look for as they start planning out their trades.

The Support and Resistance Indicator can really be broken down into two basic parts.  Care to take a guess at which two parts?  Good, support and resistance.  A support level occurs where there are a higher number of buyers and bids in place than there are sellers.  Resistance is just the opposite and at a resistance level, you’ll find a higher number of sellers than there are currently buyers.  The picture below is truly worth a thousand words or at least  the couple hundred up until this point.

Support and Resistance Indicator

Notice how the charts shows the support and resistance indicator above.  See how the support level shows the price making continuous attempts to push lower or in the case above, through the $40.00 mark.  Each time, the support level holds and there are more buyers willing to step in to buy than there are sellers to push it lower.  Flip around now to the resistance level and you can see that the stock above is having a hard time pushing through the $118.00 area, bouncing off of this resistance level twice so far.

What does this all mean for you as a binary trader?  If you can understand the support and resistance indicator, you can sometimes determine where the stock may be headed based on historical prices.  If your asset is about to run up against a support or resistance level, you can select your trade accordingly and in line with the most likely outcome as shown by indicators such as these.

Bear in mind, this article has been written in a way that breaks down the support and resistance indicator in the most basic way but if you do the research and get a feel for how a stock or asset moves, you can determine with a higher degree of certainty where it may go in the short term and as a binary trader, that is your number one goal.

For a ton of free educational tools and resources, check out TradeRush and their Educational Section.

support and resistance indicator