Technical Analysis
The remaining nine Charting Tools are used to identify Technical
Analysis formations and trends. Take a look at the different patterns
available then read about how to use each of the charting tools and
apply the technical concepts learned.
Support
Markets have a tendency to move in troughs and peaks, or more
appropriately "Support and Resistance". These troughs are called
Support. The term is self-explanatory and indicates that support is a
level or area on the chart "under the market" where buying interest is
strong enough to overcome selling pressure. Therefore a decrease in
price is reversed and prices rise once again. Typically a support level
is identified by a previous set of lows.
Resistance
Essentially, resistance (or the "peaks") is the opposite of support.
Resistance is defined as a horizontal ceiling where the pressure to sell
is greater than the pressure to buy. Therefore, an increase in price is
reversed and prices revert downward. Typically, support can be located
on a chart by a previous set of highs.
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