In forex trading, there are some basics that you just have to understand. They are the tenants of trading that must be applied properly if you stand any chance of making money. Support and resistance is one of those basics.

Support and resistance are not exact numbers. They are general areas that the market will honor, not an exact price level. That is why you will see the price exceed S&R levels, but then turn around and go back inside of them. Using these price levels are more of an art than a science, and that is why experience is so necessary.

Here are 4 types of S&R levels that you can use:

1. Regular support and resistance – these levels are quite obvious. These are prices that in the past the market turned around when it reached them. Now the market doesn’t just change directions on a whim. Someone invested enough money to cause the market to turn around.

Guess what will probably happen next time the market reaches that level? Yep, there is a good chance the market will turn around again.

2 Trend lines – as the market moves up or down, it creates highs and lows that can be joined with a straight line. Trend lines are different from support and resistance in that trend lines are drawn diagonally at an angle. However, trend lines can be just as strong, especially when they are very obvious.

3. Fibonacci levels – traders are humans, and humans trade in patterns. Fibonacci levels help identify those patterns.

Fibonacci levels are used by all kinds of traders. They are very, very popular, and that is why you need to learn how to use them. They will give you priceless clues to the market’s next move.

4. Pivot points – these support and resistance levels are much like Fib levels. A lot of traders use them, so you should at least have them on your chart to help identify where other traders might try to influence the market.