Scribd
Upload
356 views6 pages

Support and Resistance

Support and resistance levels in technical analysis are price levels where the price of a security tends to stop and reverse direction. Support levels are prices where a falling price finds support and resistance levels are prices where a rising price faces resistance. Once prices break above resistance or below support, they will often continue in that direction until reaching the next support or resistance level. Traders use support and resistance levels to identify entry and exit points for buying low at support and selling high at resistance.

Uploaded by

xnitinx
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
356 views6 pages

Support and Resistance

Support and resistance levels in technical analysis are price levels where the price of a security tends to stop and reverse direction. Support levels are prices where a falling price finds support and resistance levels are prices where a rising price faces resistance. Once prices break above resistance or below support, they will often continue in that direction until reaching the next support or resistance level. Traders use support and resistance levels to identify entry and exit points for buying low at support and selling high at resistance.

Uploaded by

xnitinx
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 6

Support and resistance 1

Support and resistance


Support and resistance is a concept in technical analysis that the movement of the price of a security will tend to
stop and reverse at certain predetermined price levels.

Support
A support level is a price level where the price tends to find support as it is going down. This means the price is
more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by
an amount exceeding some noise, it is likely to continue dropping until it finds another support level.

Resistance
A resistance level is the opposite of a support level. It is where the price tends to find resistance as it is going up.
This means the price is more likely to "bounce" off this level rather than break through it. However, once the price
has passed this level, by an amount exceeding some noise, it is likely that it will continue rising until it finds another
resistance level.

Identifying support and resistance levels


Support and resistance levels can be identified by trend lines. Some traders believe in using pivot point calculations.
The more often a support/resistance level is "tested" (touched and bounced off by price), the more significance given
to that specific level.
If a price breaks past a support level, that support level often becomes a new resistance level. The opposite is true as
well, if price breaks a resistance level, it will often find support at that level in the future.
Support and resistance 2

Using support and resistance levels


This is an example of support switching roles with resistance, and vice versa:

If a stock price is moving between support and resistance levels, then a basic investment strategy commonly used by
traders, is to buy a stock at support and sell at resistance, then short at resistance and cover the short at support as per
the following example:
Support and resistance 3

When judging entry and exit investment timing using support or resistance levels it is important to choose a chart
based on a price interval period that aligns with your trading strategy timeframe. Short term traders tend to use charts
based on interval periods, such as 1 minute (i.e. the price of the security is plotted on the chart every 1 minute), with
longer term traders using price charts based on hourly, daily, weekly or monthly interval periods. Typically traders
use shorter term interval charts when making a final decisions on when to invest, such as the following example
based on 1 week of historical data with price plotted every 15 minutes. In this example the early signs that the stock
was coming out of a downtrend was when it started to form support at $30.48 and then started to form higher highs
and higher lows signalling a change from negative to positive trending.
Support and resistance 4

See also
• Top (technical analysis)
• Trend lines (technical analysis)
• Stock market bottom
• Price discovery
• Representativeness heuristic

External links
• Support And Resistance Trading Portal [1]
• Trading Intraday Pivots, Support And Resistance [2]
• Para identificar suportes/resistência usando linhas de tendências (pt) [3]
• Para identificar suportes/resistência usando canal (pt) [4]

References
• John Murphy, Technical Analysis of the Financial Markets, ISBN 978-0735200661
Support and resistance 5

References
[1] http:/ / www. supportandresistance. com/
[2] http:/ / www. tradingmarkets. com/ . site/ stocks/ feducation/ traders/ 03022000-4573. cfm
[3] http:/ / www. conexaodinheiro. com/ linhas-tendencia
[4] http:/ / www. conexaodinheiro. com/ canal
Article Sources and Contributors 6

Article Sources and Contributors


Support and resistance  Source: http://en.wikipedia.org/w/index.php?oldid=328081548  Contributors: -oo0(GoldTrader)0oo-, Amatulic, Anticipation of a New Lover's Arrival, The, Bklyntech,
Chakreshsinghai, Charles Matthews, CliffC, DocendoDiscimus, Edward, Eric Shalov, Ezgoing85018, Gaius Cornelius, Hu12, JenyaTsoy, Navin gupt, Pgreenfinch, RJFJR, RamallahCC, Rhobite,
Ronnotel, Sensatus, StockWrap, Stoph, Thingg, Ticmarc, Tony C, Wai Wai, Zentrader, 28 anonymous edits

Image Sources, Licenses and Contributors


Image:PaychexSupportResistanceChart.JPG  Source: http://en.wikipedia.org/w/index.php?title=File:PaychexSupportResistanceChart.JPG  License: GNU Free Documentation License
 Contributors: BenFrantzDale, Sensatus
Image:MicrosoftSupportResistanceTradingChannelChart.JPG  Source: http://en.wikipedia.org/w/index.php?title=File:MicrosoftSupportResistanceTradingChannelChart.JPG  License: GNU
Free Documentation License  Contributors: Sensatus
Image:BiometSupportLevelInvestmentTimingChart.JPG  Source: http://en.wikipedia.org/w/index.php?title=File:BiometSupportLevelInvestmentTimingChart.JPG  License: GNU Free
Documentation License  Contributors: Sensatus

License
Creative Commons Attribution-Share Alike 3.0 Unported
http:/ / creativecommons. org/ licenses/ by-sa/ 3. 0/

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy