Support and Resistance - Support & Resistance

Support and resistance represent the relationship between supply and demand. On the stock market, the price depends on the gap between supply and demand. Provide large increase demand manifested a downward trend, expected to cost reduction actions resulting sale. The increase in demand over supply means rising trend, expect price increases lead to buying action. Thus, when demand increases prices will rise even when the supply increases, the price will decline. When supply and demand reach equilibrium, the price will stabilize.

What is the level of support?

Support is the price level at which investors believe there is a demand was not enough to reduce prices further. When the price falls to a low level of support or more, the buyer will likely buy next and vice versa sellers will not sell. Prior to the support price reduction, demand exceeds supply phenomena and phenomena appear which will prevent prices falling below support.

Support is not always stable and the performance level of support giambao oversupply. They would tend to sell more than buy. The level of support is broken and a new level of support is lower than forecast sellers are losing hope and they are willing to sell at low prices. Additionally, the buyer will not buy until prices fall below support or decreased compared to the previous. When the support is broken, another support level lower 1 will be set.

Support levels are set on what grounds?

Support levels are lower than the current price, but usually safe if trading near the support or at the support. Analytical skills does not require an absolute accuracy is sometimes difficult to determine the exact level of support. Moreover, the shift could mutate and prices fall below the support of a sudden. Sometimes not reasonable to assume that the support is broken if prices fell nearly 1 / 8-1 / 6 compared with the previous level of support.

What is resistance?
Resistance is the price level at which investors said the selling price is not enough to stay strong. When prices rise to resistance, sellers tend to continue to sell and buyers often stopped. Before reaching cost levels, the supply resistance will exceed demand, prevent price rises above resistance levels.

Resistance is often not maintained and resistance levels are broken forecasted demand exceeds supply. The resistance level is broken to see investors buying more than selling. Former resistance level is broken and new, higher resistance levels showed buyers are willing to buy even at a high price. Moreover, the seller will not sell until prices rise above the former resistance or higher than previous levels. Once resistance is broken, a former resistance level will be higher new set.
Resistance levels are set on what grounds?
Resistance levels are usually higher than the current price, but usually trade at or near resistance levels are quite risky. In addition, price movements can mutate and rise above resistance dramatically. Sometimes it's unreasonable to assume that the resistance is broken if the price rose nearly 1 / 8-1 / 6 compared with the resistance being set up earlier

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Support = Resistance former and vice versa

Support levels can be converted into the former resistance. When the price falls below support, the level of support that may become resistance. The support level is broken signaling supply exceeds demand. Therefore, if prices return to levels we might be increased.
Conversely resistance can also be converted to the level of support. When prices break above resistance, can appear the change of supply and demand. The resistance levels are broken proven supply exceeded demand. If prices return to levels that can demand would increase and the level of support can be determined.