One of the main things of technical analysis in Singapore Forex trading are the levels of support and resistance. Each time the rate breaks a level of support or resistance, it is usually changing to another state and makes new levels of support or resistance according to its positions. Usually the changes are reversal – the support level becomes resistance and resistance turns to a support level.
The price of the market depends on the support and resistance levels. Once it breaks one of these levels and doesn’t come back instantly so it is a big signal for any Singapore FX trader for a potentially profitable trade. However, breaking of one of the levels is not enough in order to promise you a big chance for a successful trade. It also depends on the quality analysis of the breakthrough of the support and/or resistance levels.
Currency market has a spontaneous character and sometimes it is very irregular. Its volatility is often called as “market noise” and causes a lot of unpredictable movements. Making some researchers among the technical analysis books we can often notice the images of a correct trend taking place after breaking one of the support or resistance levels. Such examples give a false impression to any newbie trader that Forex trading is so simple and making profit trading Forex is so easy. But in practice currency market is not as simple as it looks from the first sight. In order to realize how it works, you can analyze the historical movements of one of the currency pairs in the candlestick chart. There you will notice many support and resistance levels in the past periods and will be able to examine their breaking and trend appearance. As you will find out, in practice things are much more complicated and confusing. Here the problem is not only in the market noise mentioned above, it is a complex of many factors that can confuse any Forex trader – market’s spontanios movements, volatility, traders emotions and many others.
In order to make good trading decisions and assure yourself a chance for profitable trade, you must invent a certain criteria and rules that you will apply to the markets’ analysis before entering the market. These rules will help you identify true and potentially good situations from false and irrelevant ones and improve your chances for success.
According to their own knowledge many Singapore Forex traders apply the levels of 3-5% for short-term trends and 10% for long-term trends. However, this method is very simple and doesn’t reflect the real situation at the moment of the breakthrough price movements. Sometimes it is very hard to determine for what trend these 10% or 5% must be counted.
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Tags: chart, forex strategy, levels of support and resistance, singapore forex, singapore forex trading