Support and resistance
Beginner · 1 min
Look at almost any chart for long enough and you will notice the price turning around in roughly the same places more than once. Those places have names, and knowing them changes how you read a chart.
A share does not drift at random. It runs into prices where enough people decide to buy, or enough decide to sell, that the move stops. When that happens at the same price more than once, the price is worth marking.
- support
- A price the share has repeatedly stopped falling at — a floor. Enough buyers turned up there before that sellers ran out of people to sell to.
- resistance
- A price the share has repeatedly stopped rising at — a ceiling. Enough sellers turned up there before that buyers ran out of shares to buy.
Why the same price keeps mattering
It is memory, not magic. People who bought at ₹200 and watched it fall to ₹170 often sell the moment it gets back to ₹200, just to get out level. That selling is what stops the rise. Enough people remember the same price, so the same price keeps working — until one day far more buyers turn up than sellers, and it does not.
In this topic
The same price can be a strong floor or a shaky guess — what actually makes one worth trusting.
Intermediate · 2 min
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Works with
- Candlestick charts — Each candle packs a whole day of trading into one shape.
- Trends — A share in a trend keeps making higher highs, or lower lows — and most of the time it is doing neither.
- Key points and breakouts — Some prices matter more than the rest, and a share that clears one is telling you something.
- Waiting for confirmation — A price that pokes above a key point and falls straight back has told you the opposite of what it looked like.
- Head and shoulders bottom — Three lows, the middle one deepest, and a line across the bounces between them that the price has to close above.
- When the KDJ indicator misleads you — KDJ reacts to every wobble, so most of its crosses are noise — here is how people decide which ones to ignore.
- Making a hammer believable — A hammer at a price the share has turned at before, on heavy volume, says more than one in empty space.
- How much to put in one trade — Decide what you can afford to lose first, and let that set the size.
- Stop losses — The price you decide, before you buy, at which you will admit you were wrong.
- Where to put the stop — Put it where the reason you bought stops being true.
- The formula that only works backwards — A projection drawn from two past prices is a ruler, not a forecast.