UNDERSTANDING

SUPPORT &
RESISTANCE
BHARAT JHUNJHUNWALA
CMT, MFTA, CFTE, MSTA
What is Support & Resistance?
Support represents a low level a stock price reaches over time, while resistance
represents a high level a stock price goes over time. Support materializes when a
stock price drops to a level that prompts traders to buy. This reactionary buying causes
a stock price to stop falling and start rising. Conversely, resistance materializes
when a stock price rises to a level that prompts traders to sell. This selling causes a
stock price to stop rising and start dropping.

Among all the aspects of technical analysis, perhaps the most important and
actionable concepts are support and resistance. Many other aspects of technical
analysis, such as price patterns, are based on the key concepts of support and
resistance.
Why Support & Resistance?

Almost every trading system has to utilize

support & resistance for a working model.
The structure of the market is based on
understanding how support & resistance
works.
Understanding support & resistance helps
us in planning our trades. It points out
entry, exit & stops loss.
Do Support & Resistance Really Work?
Support swing acts as the anchor point. This anchor point has enough demand,
which can halt a downtrend.
We expect the prices to reverse from a demand area, which becomes support levels
for future references.
These anchor points are created by market makers - these are not random in
nature.
 Understanding the Psychology!

Participants

Long & Waiting for Short & hoping Not decided,

prices to rise. prices to fall. waiting on sidelines
Support & Resistance are perfect examples of Human
Emotions & Behaviour in the stock markets!
Emotions

FEAR GREED HERD INSTINCT



Most of us fail to identify & draw correct

area of support & resistance.
 Anchor Points & Traits to
identify correct area of support & resistance.
SWINGS OF A
MOVE
(HIGHS &
LOWS)

LOOK FOR
REJECTIONS:
LOOK FOR
CLUTTER FREE
LEVELS
The levels are pronounced!
SIGNIFICANT
REVERSAL OR
MOVE
LEVELS HAVE
POLARITY
CHARACTER
FRESHLY
FORMED
LEVELS
Which type of support/resistance is more powerful?
Any one of the above-discussed characters will make an adequate
support/resistance level. But the more the character stacks up, the better it
gets.
Some points to keep in mind:
Support & resistance is a zone not a single line.
 www.prorsi.com

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Bharat Jhunjhunwala

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