What is Support and Resistance Levels in Stock Trading?
Support and resistance are specific price areas or price levels which either support prices on declines in up trends or which resist prices on rallies in down trends.
In an up trend, short term and day traders will attempt to buy at support or at levels of support. In a down trend, short term and day traders will attempt to sell at resistance levels or in resistance areas.
If support and resistance levels cannot be determined, then you cannot define concise levels in which to establish entry or exit positions in your specific trade. It is of utmost importance for traders to develop effective strategies and methodologies for calculating support and resistance levels. These levels can be determined with the use of various trading tools like Point and Figure charts, Fibonacci numbers and Gann angles.
Day traders is in a definite advantage when it comes to the use of support and resistance levels, in as much that the day trader’s trade normally end when the trading day is over and if a bad trade or decision was made based on support or resistance levels it will not be repeated in the next...
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