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Home | Getting Started | Personal Finance | Q & A | Sample Portfolio | Glossary | About Us |
| Date: Thursday 15th 2008f May 2008 08:13:53 AM |
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Q & A - Support and Resistance - 04/09/2008 |
| By: Hari Wibowo |
| Name: pankaj |
| Website: N/A |
| Date posted: Wed, Apr 09, 2008 |
| Question: What are support and resistance in technical analysis? |
| Answer: |
| Support and resistance are shown on the graph below, courtesy of bigcharts.com. In brief, support is the price level that investors are willing to step forward and buy while resistance is the price level that investors are willing to step forward and sell. |
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| While it may be confusing, previously broken level of support will act as resistance while previously broken level of resistance will act as support. The psychological point of view is as follows; With current support at $ 70, some investors will step in and buy as MGA shares fell down to $ 70. It may or may not produce a bounce. Alas, when MGA fell down to say $ 60, those buyers at $ 70 soon regretted their decision. They would try to hold their losses and sell MGA at break even point, which means that the $ 70 mark has now become the resistance. |
| The second graph below shows a support at $ 5.00 and resistance level at $ 7.50. Currently NKTR is down towards its support level. Therefore, we may expect a bounce from this current level. |
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| Hari - Novice Investing |
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Hmm, I am confused. And I have questions |
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I'm fine, thanks. Bring me back to main page |
| Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding any securities. |
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