Original subtitles

0 Hello and welcome, everyone, in Section 2 of the course. In the first lecture, 1

I start by introducing the concept of support and resistance trading. 2

Whether you are a beginner or an experienced trader, I expect you to pay attention to this lecture 3

as this information will help you to gradually build into the later parts of this course. 4

Therefore, I do not advise skipping any of the information provided in these early lectures. 5

Now, to understand support and resistance, let us first understand how markets work. 6

As we all know, the changes in market price, whether you are trading in stocks, commodities or forex, 7

are a result of constant battle between buyers and sellers. 8

The bulls or the long traders always push the prices higher, whereas the bears or the short traders 9

push prices lower. 10

We also know that the price only travels in three directions: upwards, downwards or sideways. 11

Interestingly, all markets spend more time trending sideways instead of moving up or down, irrespective 12

of the time frame. This sideways price movement results in the formation of price support 13

and price resistance. 14

Price support is also known as price floor, where price reaches and bounces upwards within the 15

sideways price movement. 16

On the other hand, price resistance is called price ceiling, where price is pushed lower. 17

Insiders or market professionals often use these price congestion zones as a build up for the next big 18

move in the market. 19

A price can oscillate many times between support and resistance before the trend either continues or 20

reverses. Guys larger the time price spent within a support and resistance area, 21

larger the following price move will be. This extended sideways price activity represents the levels 22

of fear and greed of traders in that particular price region. 23

You will learn more about the psychology of traders later in this lecture. 24

You will also learn how support and resistance Price zones from the past become key technical levels 25

to watch out for in the future. 26

Therefore, as an experienced trader, you are only looking for three key things, and these are also 27

the three key things you will learn in this strategy and in this course: 1. Identify the start of this 28

sideways price activity on any security. 29

Taking advantage of buying and selling opportunities available within this sideways price activity. 30

Finally identify the breakout to capture the large buying or selling climax once this sideways price 31

activity ends. As we progress systematically in this course, you will learn these key things in this 32

course and you will also be able to implement them in your trading straightaway. 33

Let us look at a diagrammatic representation and a couple of examples to understand what we have studied 34

in this lecture. 35

Guys, in this first example, we are looking at AUDUSD daily charts to understand 36

the basics of support and resistance. 37

Now, starting from this price low where the red arrow is, you can see that this forex pair has 38

enjoyed a very nice rally in price in recent past. 39

Next step is to label the obvious sideways price activity on this this pair. 40

This is our first price movement sideways, as you see here. 41

Similarly I will label the remaining price activity on this chart, the key thing to note here is that 42

sideways market activity is clearly visible to the naked eye. 43

so do not stress yourself too while labelling them. 44

If it is not obvious, it's not their. 45

Now, I will switch to one lower timeframe to zoom in on the selected price areas. 46

Guys, you will notice here that price showed very less of no violation of high and low of these 47

price zones. 48

This is because the buyers and sellers are most active at these price zones. 49

I will teach you how this sidewys price activity offers high probability trade opportunities when 50

correctly studied. 51

Now that we understand how a sideways price activity looks in an uptrend, let us understand the support 52

and resistance in each of these. 53

As we all know, resistance is called ceiling, whereas the support is called the floor of the 54

sideways price activity. 55

The final thing I want you to notice here is that how price moved sharply once this support and resistance 56

consolidation phase ends. 57

This attribute is linked to all markets on all timeframes because the market pauses during this consolidation 58

phases before it advances either in the direction of the previous trend or it reverses 59

to start a new trend. 60

Now, let us quickly study support and resistance in a downtrend. 61

Guys, we're looking at USDCAD daily charts. 62

From this price high, you can see that the overall trend is downtrend as we speak. 63

Once again, I will label all the clear sideways price movement on this pair. 64

I will quickly switch to one lower time frame on MetaTrader 4 to see how price candles respected 65

the boundaries of sideways price movement. 66

Similar to the previous example, I will label the support and resistance on this pair. 67

Finally look, the trend continued after these first three consolidation phase. After all, price 68

can only break out to continue the original trend or the price reverses to initiate a new trend. 69

Guys, this also concludes this lecture. 70

This is all you need to know for the time being, please understand these basic concepts of support 71

and resistance trading carefully before we advance 72

ahead to study choosing the right timeframe to make consistent profits using this strategy.