A Price Action Tell: Support at Prior Resistance, Resistance at Prior Support

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What happens when support and resistance levels trade places? This article looks at how traders can use prior action to find actionable levels to work with.

But along the way there’s a number of deductions that traders can make that can allow for strategy to enter the picture, and in terms of trend,is fairly important. Bullish trends will often price-in a series of higher-highs and higher-lows while bearish trends will show the opposite. But – markets aren’t always trending, as we’ll often see ranges or digestion pop-up when prices are fairly equalized. That’s what brings oncan carry some significant weight.

Each of the blue lines below indicate an area of prior resistance that came into play as support. And red lines indicate an area of support that’s come into the picture as resistance.Let’s get a bit more granular with this situation, using the below chart. We’ll begin with the red vertical line, after which price action puts in a swing at the 1.4013 level .

After that second resistance reaction , sellers push price right back to support, which isn’t ready to give way yet. That happens a couple of months later.

 

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