One of the basics of technical analysis in Singapore Forex trading are the levels of support and resistance. Every time the price breaks a level of support or resistance, it is usually shifting to another state and forms 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 rate of the market depends on the support and resistance levels. When it breaks one of these levels and doesn’t return immediately so it is a good signal for any Singapore FX trader for a potentially profitable trade. Nevertheless, breaking of one of the levels is not enough in order to guarantee you a high chance for a successful trade. It also requires the quality analysis of the breakthrough of the support and/or resistance levels.
Forex market has a spontaneous character and sometimes it is very unpredictable. Its volatility is often called as “market noise” and causes a lot of spontaneous movements. Making some researchers among the technical analysis books we can often find the images of a strong 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 online is so easy. But in practice currency market is not as easy as it looks on the pictures. In order to see how it works, you can analyze the historical movements of one of the currency pairs in the candlestick chart. There you will find a lot of support and resistance levels in the past periods and will be able to study their breaking and trend appearance. As you will notice, in practice things are much more different and confusing. Here the problem is not only in the market noise mentioned above, it is a complex of different factors that can confuse any Forex trader – market’s random behavior, volatility, traders emotions and many others.
In order to make right trading decisions and guarantee yourself a chance for successful trade, you cannot do without a certain criteria and rules that you will apply to the markets’ analysis before entering the market. These criteria will help you define true and potentially good situations from false and irrelevant ones and improve your chances for success.
Due to to their own knowledge many Singapore Forex traders apply the levels of 3-5% for short-term trends and 10% for long-term trends. Yet, this approach is very simple and doesn’t show 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.
Hassam 