In London Silver trading, support and resistance levels are an indispensable part of our technical analysis of London Silver. Why are support and resistance levels so important? Let’s discuss it below.
What are the main support and resistance levels? Generally speaking, the previous highs and lows are where the major support and resistance levels are located. Why are these locations so important? Take the pressure level of the previous high as an example. Many investors entered the market to do long when the gold price tested and broke through the previous high because they believed that this was an opportunity to break through and go long. However, instead of continuing to rise, the price of London silver did not continue to rise. Instead it reversed and fell. Friends who were long near the early high point, that is, the pressure level, were trapped in the short position.
If the price of London silver continues to rise in the future, it will hit the previous high again. Those trapped bulls have gone from suffering huge losses to breaking even now. They must be thinking of getting rid of their losing positions first in order to find a way out. Therefore, when the London silver price is close to the previous high, they will continue to sell their long positions to prevent themselves from losing money as much as possible.
Therefore, near the pressure level of the previous high point, the trapped bulls continued to liquidate their long positions, and the power of the bulls continued to be weakened. On the other hand, when the price rises to the pressure level, the short sellers who are waiting for the short position attack strongly and continue to short near the pressure level. While the bulls are weakening, the bears are also gaining strength. Therefore, near the pressure level, we often see the price of London silver fall sharply. This is due to the combined effect of bulls and bears. This situation often occurs at the pressure level, and the same behavior occurs for bulls near the support level. Therefore, we need to pay greater attention to the support and pressure level, which may help us seize some big market trends.