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Forex trading has many important terms including resistance and support. These trading terms mean the price section of the currency exchange where the momentum or movement, or both, can go backwards, halt or abate. If you are starting learning Forex, you might be interested in the definition of these terms.

Support is the section where the exchange rate movement or momentum can halt, abate or go backwards in a decreasing market. As for resistance, it’s the section that shows the same in the rising market. Momentum is the speed the rate is going in certain direction and movement is the way it’s going, whether it is up or down. The sections of support and resistance are numerous and they have classifications like price limits, emotional sections, turning points, Fibonacci sections and trend profiles.

Price limit is the actual top or bottom of price movement over a certain time. These are important concepts in Forex trading and there are top and bottom prices for the day, week or month. When the exchange rates approach the last week’s top rate, it initiates some buy and sell directions and influences market action when the price goes up to the limit. When the price goes closer to the week top limit, movement and momentum can abate, halt or move backwards. You can also identify trends using price limits.

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Trend profile is a graph that shows the amount of top and bottom prices. If there is a break in trend profile, it might mean that trader should buy or sell. It might be a place of support and resistance as well. Traders can check trend profiles every week or month and identify where resistance and support might be. A trend profile based on longer period specifications, about a month time, is going to show the support and resistance better than in the shorter timeframes.

Emotional sections are the ones based on half and whole numbers. These numbers represent sections of support and resistance because this is where a lot of buy and sell directions are made.

Fibonacci levels are another support and resistance area. Mostly expert traders use them. Market goes up and down due to the huge directives placed by expert traders. The retracement areas like .38, .50 and extensions like 1.38, 1.62 are the kinds of Fibonacci levels.

Turning point are the price averages and they are determined by prior information. Turning points are usually used by traders for a certain periods of time like for a week or a month. And, again, the turning point for a longer time frame will give better support and resistance than for a shorter turning point.

You should also keep in mind that the word “section” is used for support and resistance, because they do not fall for one certain rate.

If you want to participate in forex trading must start from learning the basics of currency exchange market to make sure you do not have problems with this industry.

There is another option – you can hire experienced traders to managed your trading account – read more about forex investment here. Also make sure to look for the info in a good forex book.

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