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Sunday, March 04, 2007 9:39:50 PM
Lesson Finding Support:
Support is the reverse of resistance, support = DEMAND, where people want to BUY! So to find support we do the opposite of what we did for resistance. We look for any previous LOWS or moving average lines that are lower then the current price that will act as areas the price can bounce off of. The more a stock hits the same price the stronger the support or resistance is.
So for example AMEP chart here, the previous lows that will act as support at .0576 and .0347 AND the moving averages that are lower then the price that have green arrows are .065 which is the 20 MA line .037 which is the 50 MA line .026 which is the 100 MA line and about .015 which is the 200 MA line. Now if you look in the upper left box you will see that they rounded off the MA line resistance points to the nearest .01, which is why you have to look close and really calculate with your eye the real price the line is at.
Support is the reverse of resistance, support = DEMAND, where people want to BUY! So to find support we do the opposite of what we did for resistance. We look for any previous LOWS or moving average lines that are lower then the current price that will act as areas the price can bounce off of. The more a stock hits the same price the stronger the support or resistance is.
So for example AMEP chart here, the previous lows that will act as support at .0576 and .0347 AND the moving averages that are lower then the price that have green arrows are .065 which is the 20 MA line .037 which is the 50 MA line .026 which is the 100 MA line and about .015 which is the 200 MA line. Now if you look in the upper left box you will see that they rounded off the MA line resistance points to the nearest .01, which is why you have to look close and really calculate with your eye the real price the line is at.
All posts are my opinion only, for a full disclaimer please see this link http://smallurls.net/1508
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