Support and Resistance

Support and Resistance

5 Critical Rules for Understanding Support and Resistance Two of the most basic, yet effective, technical patterns are support and resistance. These events are horizontal trendlines which cause a stock’s direction to reverse. When prices are falling, support represents the moment when buying overwhelms selling and prices reverse. Conversely, when stocks are moving higher, resistance is the point where selling overwhelms buying and the price increases stop. Correctly identifying these trend changers will allow you to establish initial price targets and to develop your own sell discipline. As with other…