Support and Resistance
Most traders and investors use support and resistance. It is the simplest of patterns to understand and the easiest to identify just by glancing at the charts.
Support is where the price finds a base off of which it bounces upward.
Resistance is where the price finds a ceiling off of which it bounces downward.
Where clear lines of support and resistance have been formed by a stock price’s activity, the psychology of these levels comes into play. Traders will become wary around the resistance level and sell, while becoming more enthusiastic when the stock hits support. If the stock breaks through these levels, then the pattern has changed and new rules come into play.
It is difficult to identify when support or resistance ...
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