Do you know how to identify support and resistance levels by looking at a chart? This video explains in extensive detail what support and resistance are exactly and how to identify them no matter what the situation.
The text that goes with the video:
SUPPORT: the price at which there will most likely be more buyers than sellers
RESISTANCE: the price at which there will most likely be more sellers than buyers
When there are more buyers than sellers, prices rise.
When there are more sellers than buyers, prices fall.
This is why you will often see stocks bounce near support, and turn lower near resistance.
Sometimes support and resistance can be a range of prices and not just 1 “line in the sand” type price level.
Example: Stock XYZ has support between $5.00-$5.20 and it has resistance between $6.50-$6.75
The best way to pick out support is to identify price levels at which a stock has risen from in the past after previously declining towards that price level
The best way to pick out resistance is to identify price levels at which a stock has fallen from in the past after previously rising towards that price level
Stocks establish new support and resistance levels every day but some levels are more important than others.
Example: Multi year & multi month lows/highs are more important than multi week or multi day lows/highs.
Support and resistance are evident on all types of charts: intraday, daily, weekly, monthly, yearly etc…
Previous support when broken, becomes new resistance
Previous resistance, when broken, becomes new support
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