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Support and resistance
are the most important elements of technical analysis in any
form of stock trading. Support is a price 'zone' at which
a falling stock is likely to stop, at least for a short while,
and resistance is defined as the 'zone' at which a rising
stock is likely to stop rising. Stock trading support and
resistance are not precise lines on a chart, but are 'zones'
or 'areas' within which the action slows down - they act a
little like 'glue' on stock price movements. Because of their
widespread use in all financial markets, stock trading support
and resistance levels are generally regarded as the best indicator
for stock trading, and every experienced trader uses them. The
Holy Grail indicator itself uses support and resistance by
looking for a retracement against the dominant medium term
trend, and then checking to see whether that retracement was
'rejected' (i.e. whether the stock's movement ran into support
or resistance).
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