Support and resistance indicate convergences in the market where the supply and the demand meet. In the market, prices are driven by either excessive supply where the prices trend down which is referred to as bearish or excessive demand where the prices trend up which is referred to as bullish. As the demand for a futures contract increases, bulls take over as the market moves up while on the other hand when the supply increases, the counterpart or the bears take center stage and move the market down.
Support and resistance levels act almost like invisible barriers, levels where prices don’t seem to tread past. These signs can help position yourself in the market to capture price discrepancies between the support and resistance lines.
What is support?
Support is where the price is at a level in which the demand is thought to be strong enough to prevent the price from declining