Golden section line actual combat: FXTM foreign exchange support pressure zone

Determining support and pressure areas (Part 2)

2. Pull back the support area

In larger downturns,fxtmThe trend of foreign exchange prices is divided according to the golden section standard, which can be divided into four areas from top to bottom, namely, the no support area, the strong pressure area, the final resistance area, and the no pressure area.

(1) No support area

The unsupported zone in a falling market refers to the area where the price is below the 0.618 golden section line during the decline. In a sharp decline, the price usually has several large rallies, but as long as the price is always running below the 0.618 line, the downward trend will continue. At this time, investors' trading decisions should be based on holding the currency and waiting.

The unsupported zone in a falling market is a very important area for investors. In a market where value investing is prevalent, investors cannot blindly buy an investment target whose fundamentals have deteriorated or are starting to deteriorate because the price is low, because the market proverb goes: "You can't say the bottom", that is, you can't easily judge the bottom during the decline. Therefore, the best strategy for investors in the face of varieties running in the unsupported zone is to stay on the sidelines.

(2) Strong pressure zone

The strong pressure area in a falling market refers to the area where the price is located between the two golden sections of 0.618 and 0.5 during the downward rally. When the price rebounds to the area between 0.618 and 0.5 after a large decline, it indicates that the price has touched an important strong resistance area.

If the price can effectively stabilize or break through this strong resistance zone, it indicates that the rebound trend will continue; and if the price only touches the area and then turns downward again, it indicates that the rebound is coming to an end and the price will start a new round of decline.

For most FXTM foreign exchange varieties, after a large rebound, the probability of encountering strong resistance near this strong pressure area is quite high. Therefore, when the price moves to this strong resistance area, investors should pay close attention to the trend changes and be ready to sell in the short term at any time.