SUPPORT AND RESISTANCE IN STOCK MARKET CHART ANALYSIS.

 WHAT IS SUPPORT? 

• Support is something that prevents the price from falling further.

 • The support level is a price point on the chart where the trader expects maximum demand in terms of buying) coming into the stock/index. Whenever the price falls to the support line, it is likely to bounce back. The support level is always below the current market price.

• Support levels can be visualized using different technical indicators or simply by drawing a line connecting the lowest lows for the period. The rationale is that as the price drops and approaches support, buyers (demand) become more inclined to buy and sellers (supply) become less willing to sell.

WHAT IS RESISTANCE ? 

• The very term resistance in the stock market; suggests something of a kind of a barrier. 

• Resistance is the price level wherethe probability of the price moving above the level is much lower than the probability of the stock meets a price barrier and falling lower. 

• Resistance is one of the criticaltechnical analysis tools that any trader or market participant looks at in a rising market.

• When a stock is going up on momentum, the price often tends to overshoot such technical levels. However, it often returns to below the resistance as the supply builds up at the resistance level. The resistance level is normally shown on charts as a horizontal line and is generally higher than the current market price.