SUPPORT VS RESISTANCE : STOCK MARKET!!Uncategorized
Support vs Resistance in Stock Market is very useful term in stock market. Support is basically a zone or level from which a stock bounce back and tries not to go beyond that level in downside. There could be different reasons for the same. Generally it is said that buyers become active at this level resulting significant buying supports the stock from going below to this level. As buyers finds the price atractive at this level and believe that the stock is available at its best position.
Resistance is a level or zone from which, stock starts loosing its value or starts a downward trend.
Stock reaches at this level and starts coming back towards support again. Because sellers are active this area and found the stock costly or overvalued. Hence traders starts selling and resulting of same the stock shows downtrend.
Support and Resistance zones are basically used for doing positional trading. There are different stocks, which are used to be in a range. Stocks stay there for long periods even for years.
For example ITC is a perfect positional trading stock and stay in the range of Rs. 270.00 to Rs. 310.00. However there are different stocks which remain in the same zone even for very short period of 15 days or one month.
Support and resistance are also useful for taking a long or short positions. One can take a long position once a stock just broke its resistance with good volume and stay there for a long time. When a stock breaks its support with good volume, it starts loosing its value and one can take a short call in the same.
Range or Zone is basically an area in which stock use to move or stay for good time. Henceforth we can define resistance zone and support zone. Generally we prefer to use zone instead of a point as it is impossible to find out the resistance or support value and generally stock prefer to be in zone.
Basically there are three trends in the market, uptrend, downtrend and range bound. Uptrend is basically when stock starts moving in upward direction or the value of the stock keep increasing. Stock does not go below the value from which upward movement starts. http://www.mynsetrade.com
Similar is the case of the downward trend, where stock starts its downward journey and keep loosing its value and not go above the point from where downward movement starts.
Range bound stocks are those, which prefer to be in a defined range. They does not show upward or downward trend for longer period.
Attached image can be used for explaining the same, where stock of Reliance Industries is used for the explanation. https://nsestocktraders.blogspot.com/2019/06/support-vs-resistance-study.html
So these are the basis for making a good start of your trading journey, so one should know the importance of Support Vs Resistance in Stock Market.