Resistance and support levels are widely used by
experienced traders to formulate trading strategies.
For example, if a pair is approaching a very strong
resistance level, a trader may prefer to close the
position rather than take the risk of a significant
decline if the pair uptrend reverses.
On an interesting note, resistance levels can often
turn into support areas once they have been
breached. In a strong uptrend, investors and traders
will embark on a buying spree once a pair
conclusively breaks through resistance, sending it
sharply higher. But traders and investors who
missed the move may wait on the sidelines for a
better price. This pent-up demand can become a
source of support for the pair as it approaches the
earlier resistance level.