What is Support and resistance levels and its importance?

Question

hi all..am a new to daytrading..anyone know about support and resistance levels and its importance.how can calculate them ? is it useful ? have any web site to watch daily levels

Answer 1

I think its an avarage of trading high and low. when it comes support level will start buying strength inthis level and when reach it in resistance level can see the selling strength. if break this levels it will reach next level. For Indian Traders like me can refer daily levels on www.kingbells.com

Answer 2

Boy, those formula are complicated. I'm too lazy for that.

What I do is look at a daily chart, then draw in horizontal lines where the stock has turned back at least twice. The next time it reaches the line, it will either turn back or break through (for both support or resistance). If it breaks through, I check the volume - if the volume is unusually high, then it's likely a real breakout. However, there are often many fake breakouts, when the stock seems to breakout, but actually turns back, so you need to watch the volume. You should also check to see that other, similar stocks are rising/falling, as well as the overall stock market.

That's it. (Note: This also works for intraday support and resistance, support and resistance levels established on the same day)

Oh, and also, once an area of support has been broken, it becomes resistance. A resistance point becomes support once it has been broken.

Answer 3

Sometimes its easier to refer to support and resistance as the ceiling and the floor.
A stock or currency goes through regular up and down cycles.
generally there are highs and lows that it stays within.
If you have something you are trading that for instance over the last few weeks when it was up seemed to reach a level of 12 dollars and when it was down flatted out at say 9 dollars..
then 12 dollards is the resistance level and 9 dollars is the support level.

If you see a stock or currency on its way up and its at 11.20 and rising fast. well it doesnt make much sense to buy because its probably going to flatten out around 12 again...
same goes with a short. Thats what makes it important.

Sometimes they will break through on the support or resistance.

Answer 4

simple.. support is the highest level which a security when it swings up and you can be comfortable and resistance is the lowest level of tat security.. below which u r not comfortable..