Basic of Technical Analysis: Set SUPPORT and RESISTANCE level

Why support and resistance level must be set correctly?

Explanation:
1. To trigger buy and sell decision making.
2. To predict the price movement.

Let's go through a stock price chart, I picked YTL as the example.

After looking at the chart, what do you discover?

You should found out that when the price in uptrend and rise to certain price level then the price starts to drop.

So same to the drop case, when the price in downtrend and drops to certain price level then the price will starts to go up again.

Let's highlight the maximum point and minimum point of the uptrend and downtrend as per below picture.

Easy, right?

All the peaks and lows that being highlighted can be Support and Resistance level.

However, if we draw all the horizontal lines at these points will make the chart very messy.

The most important point here is the more the peaks and the lows touch the same horizontal line then that line will be the significant or important Support and Resistance level.

Next step, draw a horizontal line where it can links with the most maximum point and minimum point.

The horizontal line that links with the maximum point called Resistance level.
Support level is the horizontal line that links with the minimum point.

Now, do you know when to buy and sell?

Can you predict the price movement?

Thank you for your reading.

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