Support and Resistance

Credits: Wealth Creator

What is SUPPORT & RESISTANCE?

SUPPORT
Support is price level where buying (Demand) exceeds selling (Supply) and price stops and
reversal from downtrend.
Let’s understand example of Basketball,
Suppose Basketball Player throw ball to the ground and basketball bounce or reverse from
Floor or particular level That particular level is called Supports.
Same way in Stock price movement when stock price is downward direction and once it
touch the particular level and reverse from that level or bounce from particular level then
that particular level is called support level
RESISTANCE
Resistance is price level where selling (Supply) exceeds buying (Demand) and price stops
and reversal in Uptrend
Let’s understand example of Tall man
Suppose 6ft Tall man entered in 5 ft. room and when tall man tries to standup in that room
their head touch to ceiling and he came down
Same way in Stock price movement when stock price is in upward direction and once it
touch the particular level and reverse from that level or reject from particular level then that
particular level is called Resistance level.

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Here mark Support zone and Resistance zone
Stock price reversing at particular zone
with the help of past data or historic data we can find out previously where stock
price is reversed so we get idea where is our next support & Resistance.
So past data or old data or historic support & Resistance is useful while drawing
support.

You can see Support & Resistance where stock price is reversed also in sometimes
due to volatility price fluctuate and due to sudden reaction sometimes trade above or
below Support & Resistance levels.
Also one thing is important while you mark or find support & Resistance level
If you find Support & Resistance on Lower time frame, then price may fluctuate and
sometime not behave the Support and resistance

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So, Better to draw longer time frame like Daily or weekly or monthly then you get
reliable and accurate result.

Here you can see one more thing we already know support and resistance also we
have to take care about intermediate Support and resistance while we trading for day
trade or shorter time frame we get accurate result.
In short, we have to take care All the way like 360 degree have to se.
Here I put some snap about Support & Resistance try to observe that all photos so
you get more idea about Support & Resistance.

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Now we learn about How Support and resistance change their role internally once
Breakout or Breakdown happen, that is called Role Reversal Theory In between
Support and Resistance.

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Role Reversal Theory

Role Reversal Theory

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Case study of Role Reversal

Now Let’s See how moving Average Act as support & Resistance.

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Here one thing we have to take care in different stock their support and resistance of
moving average is different
Most Commonly used are EMA
EMA 10
EMA 20
EMA 21
EMA 34
EMA 26
EMA 9
EMA 40
EMA 50
EMA 100
EMA 200
Importance of Support and Resistance
Support and resistance levels are a critical part of trend analysis because it can be
used to make specific trading decisions and identify when a trend is about to reverse.
For example, a trader might identify an upcoming support level and decide to start
buying the stock as it approaches knowing that it will likely rebound higher. These
levels both test and confirm trends and should be closely monitored by anyone using
technical analysis. As long as the price remains between these two levels, the trend
is likely to continue in the prevailing direction.

However, a break beyond support or resistance does not always indicate a reversal.
For example, a breakout higher may be the start of a faster bullish trend and vice

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versa for a breakdown below trend line support. There are also instance of ‘false
breakouts’ when a price may breakout higher on low volume and then fall back into a
price channel.

Traders should be aware of support and resistance levels and avoid placing orders at
these major points since they’re usually characterized by a lot of volatility. If you feel
confident about making a trade near these levels, it’s important to avoid placing
orders directly at the level since they are rarely reached. This is because the price
never actually reaches the whole number, but rather, flirts with the levels before
rebounding. Traders may also place stops or short selling orders around these levels
to capitalize on a breakdown or breakout.
How Technical Indicator act as Support & Resistance

Now let’s see some other Case study about Support & Resistance.

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🙏 Thank you friends 🙏

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