The support and resistance in stock market levels are key price areas on charts where the price has shown a reaction. They are confluence zones and major swing points where the price is turned away from and starts with the new trend. It is so important to know how to find the right support & resistance because you can use them to time entries, set take profit/stops using support & resistance. They can be used to scale in and out of trades price falls right through the support level. The short traders are happy and consider adding to their positions if the price revisits the price level. The traders who did not enter the market may go short if the price comes back to the previous support level. Again a large number of traders may be ready to make a move at the level but without buying they will be selling.
The support will occur where a downtrend is expected to pause due to a concentration of demand. The resistance occurs when an uptrend is expected to pause. To identify the target price is first we have to check the support & resistance points. They are specific price points on a chart expected to attract the maximum amount of buying/selling. The support the price is a price at which one can expect from buyers than sellers.
The support and resistance lines are indicative of the price reversal. They should be taken for ascertain. One should weigh the possibility of an event occurring in terms of probability.
Trading with high volume support and resistance zones : The high volume price zones are potential support & resistance areas. The potential is the keyword here and does not work always. So do not trade them blindly. For high volume price zone is best for mapping the market structure as it is not a complete trading method. It helps if you by using other trading setups to time your entry. So at the time of trading with any form of support/resistance we lookout for zones that have failed. If the market falls through a support area it becomes invalid from support.
view moreThe price is a dynamic concept and volatile. The momentum can affect price moves in a significant way it is true when we look at the importance of support & resistance areas. When the traders are trying to place a trade at an obvious price level professional traders know and they do their best to kick out the amateurs by letting price spike through levels. The support & resistance are easy to understand but difficult to identify.
The stock charts will paint a picture of supply and demand. So the chart will tell you where the buyers are and where the sellers are. They will tell areas where price finds support & resistance. The areas will serve as a valuable marker that is fundamental in identifying entry, profit taking levels, and risk to reward ratios.
Support and resistance are price action and focus on the stock price. The indicators have a tendency to cloud a trader’s judgment. Look at timeframes to see where a stock has sold off. We start with the weekly chart to see the big picture of what is happening with the stock in the market. The start with a weekly timeframe narrows it down to daily and hourly timeframes. Then we use different colors to signify different time frame levels. The more time frames can align, the strong your level of support/resistance.
It is a mistake to view support and resistance precise lines on a chart. We can imagine that we are drawing these levels with a thick crayon and levels are called areas/zones. Price action is moving and there are bound to be some noise or outliers.
They are used by technical analysts to study past prices and predict future market moves. They are drawn using technical analysis tools like horizontal lines/ indicators such as Fibonacci retracements. Market psychology plays an important role in instrument price movement.
© 2020 All rights reserved My blogs (Posts) and videos is only educational purpose on stock market and depend on my self research and analysis. I can't advice to buy/sell any stock. because I'm not SEBI registered.If someone wants to inter the stock market, then my advice is first learn from an authorize institution or take advice from your authorized adviser.
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