Forum Archive Index - February 2002

["Chris Taylor" <c.taylor@ihug.co.nz>]

Phaedrus,

    Thank you very much for your easy to follow explanation of
support/resistance. I will be including these more in my stock analysis in
future and hope to benefit/profit  now I understand them better.

A most appreciating reader.

Regards,  C.Taylor


----- Original Message -----
From: "Phaedrus" <Phaedrus@techemail.com>
To: <Sharechat@sharechat.co.nz>
Sent: Monday, February 25, 2002 4:03 PM
Subject: [sharechat] Support/Resistance Levels


> Chris,
>       There is no minimum number of lows or highs required to constitute
support or resistance. One is enough. It is important to appreciate that the
more trading that takes place in an area of support or resistance, the more
significant that level becomes, because more participants have a vested
interest in that area. There are three ways in which the amount of trading
can be determined.
> (1) The more times that prices respect a support or resistance level, the
more significant that level becomes.
> (2) The more recent the activity, the more influence it has. In other
words, more recent support/resistance levels are more important than those
of years before. There is no cutoff period - older levels simply become less
and less relevant.
> (3) Support or resistance levels set on heavy volumes are more important
than those set on low volumes.
>
> <<< "I'd like to ask how you calculate your support and resistance
lines.">>>
> They are not calculated as such. You simply draw a horizontal line at the
level of a previous high or low. The more significant levels will take in
more than one high or low.
>
> <<<"I understand the resistance is a common high price that has yet to be
broken ....">>>
> Future resistance is anticipated at levels that were peaks in the past.
>
>  A few interestings facts :- Support levels, once broken, tend to become
resistance levels. Resistance levels, once broken, tend to become support
levels.
>  Traders tend to think in terms of round numbers, so there is a tendency
for advances or declines to stop at round numbers. These will often act as
"psychological" support or resistance levels.
>  The concept of support and resistance levels is simple yet very powerful.
It forms one of the cornerstones of technical analysis.
>
>          Regards,
>                     Phaedrus.
>
>
>
>
> _____________________________________________________________
> Are you a Techie? Get Your Free Tech Email Address Now! Visit
http://www.TechEmail.com
>
> --------------------------------------------------------------------------
--
> To remove yourself from this list, please use the form at
> http://www.sharechat.co.nz/chat/forum/
>
>
>


----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/chat/forum/