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In stock market technical analysis, support and resistance are certain predetermined levels of the price of a security at which it is thought that the price will tend to stop and reverse. [1] These levels are denoted by multiple touches of price without a breakthrough of the level.
Pivot point – derived by calculating the numerical average of a particular currency's or stock's high, low and closing prices; Resistance – a price level that may act as a ceiling above price; Support – a price level that may act as a floor below price; Trend line – a sloping line described by at least two peaks or two troughs
Trend lines are used in many ways by traders. If a stock price is moving between support and resistance trend lines, then a basic investment strategy commonly used by traders, is to buy a stock at support and sell at resistance, then short at resistance and cover the short at support.
A pivot point and the associated support and resistance levels are often turning points for the direction of price movement in a market. [1] [page needed] In an up-trending market, the pivot point and the resistance levels may represent a ceiling level in price above which the uptrend is no longer sustainable and a reversal may occur. In a ...
Fibonacci retracement is a popular tool that technical traders use to help identify strategic places for transactions, stop losses or target prices to help traders get in at a good price. The main idea behind the tool is the support and resistance values for a currency pair trend at which the most important breaks or bounces can appear.
A breakout is when prices pass through and stay through an area of support or resistance. On the technical analysis chart a break out occurs when price of a stock or commodity exits an area pattern. Oftentimes, a stock or commodity will bounce between the areas of support and resistance and when it breaks through either one of these barriers ...