The concept of support and resistance trading is simple: buy when the price of the currency pair is at a valid support level and sell when the currency pair is at a valid resistance level. The key is therefore being able to identify support and resistance and when these key levels are valid enough to be used as trade signals.
Support
A support level or zone is a price area where sellers who have driven prices downwards start to exit their positions, leaving more buyers to cause the downward slide of prices to stall. The Price of the asset will therefore find it difficult to go below that level.
Resistance
A resistance level or zone is a price area where buyers whose activity has driven prices upwards start to close their positions, causing a stall in the price advance of the asset. The price of the asset will therefore find it difficult to advance above that level.
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