Support & Resistance

Updated: Jan 27


Support

(No 1 on chart)


This is where the price is struggling to go below, there are more buyers than sellers that makes it “Bullish”.


We use levels of support for a buy opportunity or to cut losses if a stock goes below. If a stock moves below the support line it means it will most probably move further down to the next support.


Resistance

(No 2 on chart)


This is where the price of the stock is struggling to move above, there are more sellers than buyers, this makes it “Bearish”.


Use resistance levels as a sell opportunity or cut losses on a short position. Shorting is when you make profit from stocks moving down.


Change in Support & Resistance

(No 3-4 on chart)


If either is broken this can create a new level of support or resistance.



This is a good example of what it will look like.


Dictionary


  • Bullish – The stock price is going up, getting more expensive due to more buyers than sellers.

  • Bearish – The stock is moving down, price decreases due to more sellers than buyers.

  • Supplying – Sellers market

  • Demand – Buyers market

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