When analyzing foreign exchange, short-term support level and pressure level are often mentioned, but some foreign exchange investors don't know much about the application of this index.

I. Principles

Resistance and support are actually affected by the long-short relationship. In the process of rising, with the short market gradually surpassing the long market, the price will continue to rise, forming resistance; In the process of decline, with the price reduction, the bull market gradually becomes shorter and shorter, forming an upward supporting power.

Support level: when the exchange rate falls to a certain range, a large number of transactions change hands, and the short-selling power is exhausted, which is expected to stop falling and stabilize. The connection between these low points is called the support line, and many unsuccessful falls at this position have formed a strong support line.

Resistance (pressure) level: When the market price rises to a certain level, there will be a large number of short sellers due to the pressure of profit taking or eager to solve the problem, which will suppress the price and lead to the price falling back. If there is no effective breakthrough in this position for many times, a strong resistance line will be formed.

Second, the common judgment methods of support level and resistance level

1, average

The moving average has two major functions: one is to indicate the direction; The other is to provide a basis for judging the support resistance.

Because the moving average takes the average of the closing prices for many days, it has corresponding support and pressure on the fluctuation of exchange rate. When the exchange rate returns to the vicinity of the moving average, investors tend to rebound at the bottom, thus forming obvious support there.

However, when analyzing the short-term support resistance by using the moving average, it should generally conform to the principle of large-period small moving average and small-period large moving average. For example, looking at the daily line, we generally pay attention to the resistance of the 5-day, 10 and 20-day moving averages. If it is a 60-minute chart or a 15-minute chart, generally look at the moving average of 100, with 200 cycles.

2. Bollinger Band

Bollinger Bands generally judge the support resistance level by observing the upper rail, middle rail and lower rail.

Generally speaking, the bollinger band does not change much in the leveling stage, when the support level and resistance level are relatively stable, which is also the best time for high-throwing and low-sucking operation. However, investors should also note that when the bollinger band is flat, it is even more necessary to set a stop loss to prevent a breakthrough.

In addition, when using bollinger bands to judge, we should choose a larger period as much as possible, such as a bollinger band with a period of 55 or even 100.

3, the golden section line

The golden section is the most common and effective way to find support and resistance.

Just open the chart, use the golden section index to connect two relative high points and low points in a period of time with the low point as the base point, and judge the support point of the price according to the corresponding point of each golden section line. The judgment of pressure level is based on the relative high point.

Among them, 38.2% and 6 1.8% and 50% golden section gears are the most important.

Third, the main points of operation

First of all, it must be clear that the resistance level does not have to be short and the support level does not have to be long. Everything depends on the specific situation.

For radical investors, if they want to do more when they reach the support level, it is best to enter the market in batches and test it first. If the judgment is correct, you can add positions after making profits. If it is wrong, you can make up the position at the next support level. But remember, you can only make up your position once, otherwise once the trend turns empty, it will cause great losses.

For cautious investors, it is best to wait for the following trends before entering the market:

1. From the K-line, it is necessary to wait for the cross star, the bull's-eye, the puncture and the hammer before considering entering the field.

2. From the morphological point of view, it is necessary to wait for departure, head and shoulder bottom or W bottom before considering entering the market.

3. From the trend line, we will not consider entering the market until the trend line breaks through in a small range.