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Support and resistance describes the price levels where markets repeatedly rise or fall and then reverse. This phenomenon is attributed to basic supply and demand.

:::::>Support and Resistance

Support and Resistance

Support and resistance lines are horizontally projected price levels obtained from patterns such as double tops and bottoms. Resistance shows where sellers will not sell higher prices and buyers want to take profit. Support shows where buyers will not buy lower prices and sellers want to take their profit. In a uptrend, the resistance levels represent pauses in the uptrend which serve to temporarily halt the price advance. (Vice versa for support lines).

Support and resistance levels reverse roles once they are decisively broken. If price penetrates a resistance level, then it will generally move upward to the next resistance level. The previous resistance level now becomes support. The longer prices trade near a support or resistance level, the more significant that level becomes.

:::::>Trend lines

Trend lines

Trend lines are lines connecting two or more of the lowest points or highest points of a series. During a uptrend, a trend line is drawn from the first significant low to the next, extending from left to right. (Vice versa for downward trend lines.) Trend lines can be upward, downward or horizontal and act as support and resistance of trend. Their importance depends on how often prices touch it.

The length of trend line also determines if a breakthrough is significant. The size of breakthrough can be forecast by measuring the maximum divergence of price from trend line and extrapolating that distance from breakout point (this is a minimum goal). The sharper the trend line angle, the less significant is any breakthrough. If a weak angled trend is broken, it is more significant.

:::::>Trend Channels

Trend Channels

Trend channels represent support and resistance lines around a basis trend line. A breakthrough of a s/r trend confirms a breakthrough of the basis trend, especially if it is accompanied by high volume.

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