Support and Resistance
does a market find support
at a specific price. This could be for any
number of reasons which we go into in detail in the various pages in
the rest of our technical
section. It could
even be something as simple as a round number.
is created where buyers have gained control.
The strength of that support depends on how much extra buying there is
- Traders and
investors love round numbers. When most folks decide to take a trade
they usually have a number in mind that they want to trade at. For
decide that they will buy when a stock price drops to $20, so when a
stock drops from, say $23.68 there can be a number of traders with the
same idea and are waiting
to enter the market when prices fall back to $20
- $20 is just an example as the same
scenario would have applied at $23,
$22 and $21 on the way down but just at at a lesser degree as more
buyers will have come in at the bigger round numbers. 10s, 100s, 1,000s
and 10,000s etc...you get the drift, right?
is true for resistance.
That is where selling has
overwhelmed the buying.
with Support and Resistance Indicator Trend Lines