Horizontal Support & Resistance occur because of Order Flow. People (and institutions on their or a company’s behalf) place orders into the market where they think price will turn or they want to take profits, get out of a losing trade or at a price where they wish to exchange one currency for another.
Horizontal Support occurs when there are more Buy orders than Sell orders so the Bulls win the day; horizontal Resistance occurs when there are more Sell orders than Buy orders and the Bears win the day. Support and Resistance on a chart is nothing more than a visual representation in price and time of Buy (Demand) and Sell (Supply) Order Flow which is real people setting and executing Buy and Sell orders. This creates horizontal Support and Resistance, nothing more and nothing less.
When price moves up and down in waves in the market the swing highs and swing lows create wicks on candles (fractals) where one can draw trend lines, be they Support trend lines or Resistance trend lines. Trend lines should be drawn connecting these fractal wicks and should not cut through the body of a candle on a chart. The next thing to understand is that order flow created the wicks on the candles, which created the fractals and thus diagonal trend lines if drawn correctly are also a representation of Supply and Demand Order flow and thus Support and Resistance.
Top Tip: When looking at your charts think about Supply and Demand and Order Flow and where orders are likely to be placed and consider the use of trend lines alongside horizontal Support & Resistance, it might help with your trade planning and when and when not to pull the trigger.
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