This page is educational in nature as we explore common trading concepts via explanations, charts, and videos.  Just a few to be discussed include the following:

BREAKOUTS

TREND CONTINUATION

TREND REVERSALS

BUY THE DIP/SELL THE RIP

SUPPORT

RESISTANCE

FAST MOVES FROM FALSE MOVES

WHAT WAS SUPPORT HAS BECOME RESISTANCE

WHAT WAS RESISTANCE HAS BECOME SUPPORT

BOXES

FROM TRANSITION TO TREND

GAP FILLS

…and much more…

 

 

SUPPORT (DEMAND)

 

Concept Defined

Support is where buyers previously purchased a stock, halting it, at least temporarily, from moving lower; therefore, representing what buyers currently consider the lowest worthwhile price for that stock. The demand, or desire, to own the stock at a past price level remains a force, placing a floor on the stock. In other words, support represents the price where buyers are willing to step in and buy enough shares to at least temporarily stop a downtrend or possibly begin its reversal for a new uptrend.

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A support level is a price level at which sufficient demand for a stock appears to hold a downtrend temporarily at least, and possibly reverse it, i.e., start prices moving up again. (Technical Analysis of Stock Trends, Edwards and Magee)

A support level is that price at which one may expect a considerable increase in the demand for a stock, or buying. (How Charts Can Help You in the Stock Market, William L. Jiler)

Support is a level or area on the chart under the market where buying interest is sufficiently strong to overcome selling pressure. As a result, a decline is halted and prices turn back up again. (Technical Analysis of the Futures Markets, John J. Murphy)

 

Concept Illustrated

ESRX: WEEKLY SUPPORT

ESRX: WEEKLY SUPPORT

 

CYBR: DAILY SUPPORT

CYBR: DAILY SUPPORT

 

Concept Application

Initiate a long (bullish) position in anticipation of renewed buying and potential trend reversal.
Exit a current short (bearish) position using anticipated buying (at support) as the profit target.
Watch and wait for a potential break of support with renewed selling and trend continuation. Initiate a short (bearish) position if support breaks.

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RESISTANCE (SUPPLY)

 

Concept Defined

Resistance represents an area where sellers previously sold a stock, halting it, at least temporarily, from moving higher; therefore, representing the price that sellers currently consider the highest worthwhile price for that stock. The supply, or desire, to sell the stock at a past price level remains a force, placing a ceiling on the stock. In other words, resistance represents the price where sellers step in and sell enough shares to at least temporarily stop an uptrend or possibly begin its reversal for a new downtrend.

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A resistance level is an approximate level, or fairly well defined price range, where a previously advancing stock meets resistance in the form of strong selling. (How Charts Can Help You in the Stock Market, William L. Jiler)

When prices have been rising and then reverse downward, the highest point in the rise, the peak, is referred to as a resistance point, a level at which the advance has met with selling “resistance”. When the sellers (supply) become more powerful and aggressive than the buyers (demand), the result is a subsequent price decline from the peak. A resistance level becomes a resistance zone when more than one resistance level occurs at roughly the same price. (Technical Analysis, Charles D. Kirkpatrick II and Julie R. Dahlquist)

Resistance is the antithesis of support; it is selling, actual or potential, sufficient in volume to satisfy all bids and, hence, stop prices from going higher for a time. (Technical Analysis of Stock Trends, Robert D. Edwards and John Magee)

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Concept Illustrated

KITE: WEEKLY RESISTANCE

 

MCK: DAILY RESISTANCE

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Concept Application

Initiate a short (bearish) position in anticipation of renewed selling and potential trend reversal.
Exit a current long (bullish) position using anticipated selling (at resistance) as the profit target.
Watch and wait for a potential break of resistance with renewed buying and trend continuation. Initiate a long (bullish) position if resistance breaks.

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