• October 12, 2010

How to Measure Stock Support and Resistance

by Donald Harder

Have you ever played ping-pong?  In ping-pong players hit the ball across the table to the other side; each player hits the ball with his paddle causing it to reverse direction.  The price of a stock in the stock market works in similar fashion as it moves between support and resistance.

Support is a price level where buying is strong enough to cause a reverse in a downtrend.

Resistance is a price level where selling becomes strong enough to reverse an uptrend.

Support and resistance can be minor, causing only a slowing of the current trend, or major, causing a complete reversal of the trend.  Smart traders look for support levels when they wish to buy and resistance levels when they wish to sell.

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