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How to react at resistance and Support

How to react at resistance and Support 
              - Free invest game invest

A) resistance

First thing you need to know what is resistance and support.

resistance means (in terms of Stock market) at particular price suddenly so many seller show up and start to sell and Stock price stop to go up and start down move, means at particular price supply increase then demand and as a simple rule of supply and demand if supply increase then demand price comes
down and same way demand increase then supply price goes up. At support level demand going to increase and price stop to go further down and start to increase up. Yes its Stock market nature that if the market breaks one resistance (Goes above resistance) it absolutely goes at the next resistance. In many case the market not breaks resistance at first try, its takes two or three tries. In most of the case after going at resistance it retest it's supports. Then what to do? My suggestion is always book profit at resistance and if Stock market breaks that resistance enter again and wait for next resistance with stop loss of broken resistance.
You can buy at support also but you need to take more care because if Stock market breaks that support it goes at next supports. At the support if the market bounces back then its a right entry time, here you can enter with stop loss of that support.

B) Supports

Its works the same as resistance only things goes in reverse. You can short sell any Stock after breaking supports because its Stock market nature that it goes up to next supports or you can go long (buy Stock, option, ETF) if price bounce back from the support with that support as stop loss.

You can get good result if you combine support and resistance with technical indicator like: Average Directional Movement Index (ADX) | On Balance Volume (OBV) | Percentage Price Oscillators (PPO) | Relative Strength Index (RSI) | Stockhastic Oscillator (STO) | Commodity Channel Index (CCI) | Chaikin Money Flow oscillator (CMF). | Rate Of Change (ROC) with Moving Average (MA) to know Stock market in oversold or overbought condition. Once you know Stock market status you can go long or short at support or resistance.

When we use two or three technical indicators together and in the case of positive divergence or negative divergence, it giving always positive result, only you need to consider proper time span and that you can find out by trying different time frame and look for better pair for your Stock trading. This is a very effective and rewording strategy for Stock investing, Stock trading and day trading

Related reading

Work with Stock market trend
Right time entry in market
Right Time exit
Influence of News and Technical indictors
How to find out Time Frame for Stock trading
How to work with technical indicators to trade in the market
Did you know Technical Indicators moves behind Price
How to react at resistance and Support
How to find out resistance and Support
Importance of Technical analysis


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