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There are many methods that Forex traders use to profit in the markets. Observing Forex Trading Price Action Support And Resistance is one of those methods. This method would fit into the classification of technical analysis. Traders who use technical analysis take price, time, and other market data and study them to create a set of rules or methods to trade the markets.

Since the markets move only up, down, or sideways the analysis of price action in support and resistance has been widely used by many traders. Here’s a quick breakdown of some of the terminology used in this type of analysis.

Support is basically a price level that the trader has determined is the "floor" for a market’s prices. When prices fall through support levels this is interpreted as the start of a downtrend.

Resistance is a price level that the trader has determined to be a "ceiling" for a market’s prices. When prices break through resistance levels this is interpreted as the start of a uptrend.

When the prices movements stay between support and resistance levels the market is said to be moving sideways. This sideways market movement is also referred to as being "rangebound" .

Observing support and resistance levels gives the trader a grasp on the direction of a market. Once the trader has determined which phase the market is he can then decide whether to buy, sell, or stand aside.