Technical analysis of transactions is an essential part of trading, and in the process of using technical analysis to analyze trends, traders most often use the support and resistance levels of the candlestick chart. Support and resistance levels are the most widely used concepts in foreign exchange trading. They seem simple and easy to understand, and are essential analysis methods for trading. However, for many novice traders, the use of support and resistance is still relatively unfamiliar, and sometimes even the failure of trading is caused by the inability to accurately find the support and resistance levels. In today's article, a veteran with 8 years of experience will share with you how to accurately find support and resistance levels.   First of all, what are resistance and support levels? Resistance level is the price at which the market price stops rising or even falls back and starts to fall when it rises to a certain position under the influence of the market's selling power. Support level is the price at which the market price stops falling or even rebounds and starts to rise after it falls to a certain position under the influence of the market's buying power. For technical traders, support and resistance levels are undoubtedly the most commonly used entry and exit signals. So, how should traders judge support and resistance levels? Method 1: Judging the volume of long and short positions First, we need to know how the support and resistance levels are formed. When the long and short positions meet certain conditions, they can be transformed. In an upward trend, as the increase continues to increase, when the gains of the long side are recognized by some people, they will sell their chips. At this time, the long and short forces will change. The previously strong longs will decrease as the increase increases, while the shorts will grow stronger due to the increase in selling power. Between the increase and the decrease, there will be a time when the long and short forces will reach a balance. At this time, the position of the trend is what we call the resistance level (called the support level in the downward trend). In addition to the mutual transformation of the long and short sides, the emergence of reinforcements must also be considered. This is why the previous high and low positions are generally regarded as resistance or support, because such positions generally have new forces added, which will cause changes in the comparison of long and short forces.Finally, leverage the trend to quantify the changes in the strength of bulls and bears. The change in the strength of bulls and bears is an intangible thing, so we need to quantify it. By observing the trend structure, we can achieve this purpose; the stronger the bullish power, the larger the angle of the rise, and the faster the speed of the rise; on the contrary, the stronger the bearish power, the faster the speed of the fall. When the strength of bulls and bears is roughly the same, the market enters a consolidation trend.

Method Two: Pay attention to the convergence area

Prices at obvious high and low points, as well as areas of heavy trading volume, are usually very important positions and are typically the entry points. Prices usually have a more obvious reaction near obvious high and low points, as well as areas of heavy trading volume, usually encountering resistance near resistance levels, and receiving support near support levels.

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In addition to obvious high and low points and areas of heavy trading volume, the following indicators can increase the effectiveness of this convergence factor. If a moving average group is used as an indicator, then the area between the two moving averages can serve as a dynamic support and resistance area. When this area converges with obvious high and low points and areas of heavy trading volume, it becomes a very important position.

Moreover, the Fibonacci retracement line is often used as a standard for dividing support and resistance levels, and suitable convergence areas can also be found. It is worth noting that the convergence of multiple indicators will enhance the effectiveness of the support and resistance levels at this position. The more types of indicators that converge, the more effective they are, and the more attention should be paid accordingly.

Finally, traders can pay attention to the performance of K-lines or price patterns at this position. If the price shows a corresponding standard reversal K-line, PinBar, engulfing pattern, or patterns such as the evening star or morning star here, it can serve as a confirmation signal, indicating that the price has received obvious support or resistance here.

At the same time, traders can also reduce the time cycle to a smaller time cycle, such as a 4-hour cycle, down to 15 minutes or 30 minutes. If the price shows a clear price pattern in this convergence area, it can also serve as information to confirm whether the position of this area is effective.