Trading With Support And Resistance
support and resistance refers to price points beyond which a stock does not have a tendency to fall or rise. these points are widely ? by technical analysts who use support and resistance points on charts to determine which direction to trade and at which price level they should enter and exit their positions. support levels represent the lowest price that a stock tends to trade at, while resistance represent the highest price that a stock tends to trade at. for example, ?, a day trader, examines the chart to decide when to take a long position in bigco. she sees that the price of bigco shares hit at $72 in the last year. therefore, $72 is bigco's resistance level. she also notices that the price of a share hasn't fallen below $50 though it has come close several times. $50 is bigco's support level. with this information, ? decides to place an order to buy 1,000 shares of bigco the next time it's price falls to $51. she thinks this price represents a good buying opportunity. at $51, bigco's price is unlikely to get substantially lower and seems likely to rise as high as $72. by understanding support and resistance, short-term traders are more likely to make profitable trades. they can identify price levels beyond which a security is unlikely to move and place their trades accordingly.