When you’re trading stocks, it’s important to understand how the stock price moves. One way to do this is by looking at something called support and resistance.
Support is a level where the stock price stops going down and starts going up. This happens because there are a lot of people who are willing to buy the stock at that price. They think the stock is a good deal and they don’t want to miss out on it.
Resistance is a level where the stock price stops going up and starts going down. This happens because there are a lot of people who are selling the stock at that price. They think the stock is overpriced and they want to get out before it goes down.
When the stock price is near a support or resistance level, it’s a good time to pay attention. If the stock price breaks through a support level, it might go down. If it breaks through a resistance level, it might go up.
Support and resistance levels can change over time. Sometimes, a stock price will go through a support level and then come back to it. This is called a “retest.” It’s important to pay attention to retests because they can tell you if the stock price is going to go up or down.
To find support and resistance levels, you can use charts and technical analysis. This means looking at the stock price over time and seeing where it stops going up or down. You can also use indicators like moving averages and Bollinger Bands to help you find support and resistance levels.
In summary, support and resistance are key levels in stock trading that help traders understand how the stock price moves. Support is a level where the stock price stops going down and starts going up and resistance is a level where the stock price stops going up and starts going down. When the stock price is near a support or resistance level, it’s a good time to pay attention. Traders use charts and technical analysis to find support and resistance levels.
