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Finance allah shmoop what Our support levels and resistance levels

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All right Support It's a broth for stock trading You

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know lifts and separates Sort of our resistance Well you

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know how the alien opines resistance is futile Well this

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is how new shmoop employees heir born low cost alien

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non union labour and nothing like it Okay so let's

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look at a few stock charts here Well support level

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cleverly named because here you can see support It's a

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ziff As soon as the stock touches anywhere close to

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this line well it bounces meaningful E up What does

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that mean It means that investors have a price at

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which the stock is a no brainer bhai and they

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all buy it right there So then what about a

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resistance level Well kind of inverse here like check out

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this little engine that could stock It's trying to break

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north higher and higher It thinks it can It thinks

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it can There's just too much resistance And it gets

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sent back down to the man Yeah well then it

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has to chug chug again thinking if can thinking can

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think it can't And then resistance So yeah that's resistance

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So this is where the collision between fundamental and tech

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analysis can emerge or at least drive into each other

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You might have a stock that has supported fifteen bucks

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and trades as high as twenty for a while But

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then it gets beaten back down with its resistance level

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touch that traders who control the pricing of a given

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stock on any given day will manage its pricing within

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that given range But over time the fundamental business or

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earnings power or profitability of the company well it wins

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out over its short term trading dynamics Fundamental investors might

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be the ones doing the buying at fifteen box not

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technical chartist that is you might have a stock that

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paisa in three percent dividend at twenty dollars a share

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or sixty cents a year but fifteen dollars a share

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Well then the dividends massive at four percent And with

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the dollar in change in earnings it's a steady eddie

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stock that investors will buy all day long at fifteen

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dollars So in essence the fundamental investors in fact are

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the ones providing quote technicals aboard unquote for the stock

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at that level And eventually if that stock ends up

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growing in producing same three dollars a share in earnings

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Well it won't be trading at anything close to fifteen

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dollars or twenty dollars anymore It will have broken out

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of the resistance level that was operating like gravity keeping

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it down you know like the man does so supporting

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resistance levels exist in a vacuum within trading days or

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weeks and they come in a variety of flavors Other

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kinds of support patterns happen as well Here's supporting a

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characteristic line and it supports all kind of right there

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and well here's support in a double bottom We cannot

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lie You know there's a port right there in there

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and here you have support in a rectangle But well

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note that you also have resistance up here and the

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line looks like it's trying to break out of that

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rectangular pattern But it's getting resistance and coming back down

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And he also see support in other areas like ascending

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tops And there's resistance that presses down new highs And

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you still have other patterns like well this congestion area

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which makes this doc look like a trading sardine where

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traders will buy it It's a support line and then

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sell it at the resistance line all day long and

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make nickels and dimes well The key notion and all

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of these supporting resistance style charts is that patterns work

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until they don't So check out this very decisively resistant

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top in this triple top pattern It's like the line

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just can't break out of it Ah ever But if

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you check out the breakout pattern in this breakout chart

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yes there was resistance until the company produced a dollar

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eighty three and earnings when everyone thought it would only

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produce a dollar forty and then blame Oh the stock

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breaks out to a new high level at which point

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all bets are off and the pattern picking charters take

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their losses from having been short the stock of the

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top And then they go hunting for some new pattern

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religion Sat words don't don't trust charts

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