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SUPPORT & RESISTANCE

HYPEDTRADER

Definition

Support is a price level or just a "line" where a downtrend or down move can be expected to pause due to a rise of demand or buying interest. As the price of assets or securities drops, the demand for the shares increases, thus forming a line which has a potential of holding the price and making it rise or bounce back again.

Resistance is a price level or just a "line" where a uptrend or up move can be expected to pause due to a rise of supply or selling interest. As the price of assets or securities rises, the supply for the shares increases, thus forming a line which has a potential of holding the price and making it fall or bounce back again.

Trade the “Bounce”

  • Buy when the price falls towards support.

  • Sell when the price rises towards resistance.

Trade the “Break”

  • Buy when the price breaks up through resistance.

  • Sell when the price breaks down through support.

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In The Video

When beginners are starting their trading journey they often stumble upon the terms Support and Resistance. Now, put all your doubts and partial information about S/R aside because here is the simplified explanation of S/R you've been looking for. S/R are nothing but lines which 'navigate' the market movements or 'support' and 'resist' them. Might be getting some questions in your mind innit? Let's narrow it down with a stupid example. Imagine yourself flying an R/C helicopter in the ground floor of a building with two floors. Now if you wish to fly it at a high altitude, how far up can it reach at max? The answer would be: as high as the ceiling of the ground floor. Here, the ceiling is serving a restriction to the helicopter's movement. Thereafter, if you wish to fly it back down, then the lowest it can get is the floor. Likewise, in a real time market, the upper movement of price is restricted by a line called 'Resistance' and the lower barrier for the same is 'Support'.​

 

 

Now the significance of these levels in a market is that, these can help you get an idea about the point where the market price is gonna make a flip from. This would not only help in filtering out a precise entry, but would also help you detecting potential critical points from where market would bounce back into the opposite direction.

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