WEBVTT 00:03.360 --> 00:07.170 In this video, we're going to keep it simple, we're going to talk about the most basic thing that 00:07.170 --> 00:10.110 you will need to know and that support and resistance. 00:11.090 --> 00:16.790 On the trading view platform, there is a line over here on the side, and if you click on this little 00:16.790 --> 00:19.670 arrow, it expands the menu out. 00:19.670 --> 00:24.560 I'll be using the horizontal line to draw support and resistance lines. 00:25.190 --> 00:29.030 And you can see that if I click on the chart, it pops up. 00:29.030 --> 00:32.540 There's a little bubble which allows me to drag it back and forth. 00:32.990 --> 00:34.760 And you click away and it goes away. 00:36.000 --> 00:44.400 So support, resistance, support and resistance are simply areas on a chart that buyers or sellers 00:44.400 --> 00:45.390 cannot break through. 00:45.450 --> 00:48.960 So if you can imagine a. 00:52.340 --> 00:54.640 Or any financial instrument, for that matter. 00:55.820 --> 01:02.930 Trying to break above this area here and failing that, is the market resisting price from going higher? 01:07.330 --> 01:13.570 Market doing something like this and finding a level where we can't break through to the downside is 01:13.570 --> 01:15.850 said to be supporting price. 01:15.880 --> 01:20.860 So it's either resisting or supporting an uptrend. 01:20.860 --> 01:24.310 It's based upon an uptrend, although it works in both. 01:25.610 --> 01:32.150 So you can take this line and you can draw little areas, and the first thing that I would mention is 01:32.690 --> 01:39.770 you can see where Price resisted, was resisted at this area here previously. 01:39.770 --> 01:41.300 And a lot of selling pressure came in. 01:42.020 --> 01:46.760 But when we broke above it, buyers started supporting the market right in this area as well. 01:46.880 --> 01:48.590 And that's something called market memory. 01:49.070 --> 01:51.140 So market memory is based upon. 01:52.310 --> 01:57.730 And I'll go back to our example here of resistance, but it does work in both directions. 02:00.840 --> 02:05.880 Perhaps sellers coming in at this level, two hundred fifteen dollars in this case. 02:07.120 --> 02:10.510 And they continue to sell well, what happens when we finally break out? 02:11.230 --> 02:16.000 Well, when we finally break out, there are a couple different groups of people that will be noticing 02:16.000 --> 02:16.390 this. 02:16.430 --> 02:19.240 No one would be the sellers who are losing money. 02:20.150 --> 02:26.840 If the market comes back to test this area, they are willing to get out and perhaps even reverse their 02:27.020 --> 02:30.490 position with a smaller loss than they would have had up here. 02:31.370 --> 02:37.620 So they have an inclination to close their short positions, which means they have to buy the stock. 02:38.360 --> 02:45.080 The other group of traders will be the people who missed the move entirely and are waiting for a cheaper 02:45.080 --> 02:46.290 price to get involved. 02:46.310 --> 02:47.930 What could be a move higher? 02:49.510 --> 02:54.560 One way to think about this, an old axiom is what was once the ceiling becomes the floor. 02:54.610 --> 03:01.540 So think of support and resistance levels on a chart like this and think of it perhaps as a cross section 03:01.540 --> 03:02.440 of a high rise. 03:04.950 --> 03:11.670 So if you're in the first floor, second floor, third floor, et cetera, if you go above this resistance, 03:11.670 --> 03:18.240 which was the ceiling of the first section, it should now be the floor of the second section or the 03:18.240 --> 03:21.850 second grouping of trading and so on. 03:22.200 --> 03:29.510 So what was once the floor becomes the ceiling, if you drop a floor, it's a very similar idea. 03:32.070 --> 03:38.010 Support and resistance tends to be found at round numbers, so for this example, you could say maybe 03:38.010 --> 03:38.790 one to 80. 03:41.650 --> 03:48.280 And that's because large order flow tends to happen at large round numbers because, you know, unlike 03:48.280 --> 03:52.330 us, some of these large houses are coming in buying millions of shares. 03:52.870 --> 04:00.100 So they have to continually buy in this area when it pulls back, because if they buy too many shares 04:00.100 --> 04:02.350 in one shot, it'll make the market move against them. 04:04.270 --> 04:07.270 Those of us that are retail traders, we don't have that issue. 04:08.380 --> 04:11.210 So let's go ahead and take a look at what this looks like in an uptrend. 04:11.740 --> 04:15.370 Well, you can see clearly that somewhere around 140. 04:15.370 --> 04:15.910 Forty dollars. 04:16.900 --> 04:19.720 Apple has been supported in the past. 04:21.940 --> 04:24.610 You can also see that we had seen some trouble here. 04:26.010 --> 04:31.560 Resistance happen now, we did break down below here, but there's also a gap there which is somewhat 04:31.560 --> 04:32.030 supportive. 04:32.040 --> 04:37.440 You can see we broke down below here and then turned around to form a hammer, which is a very bullish 04:37.440 --> 04:38.100 candlestick. 04:39.700 --> 04:45.810 And couldn't even get back down here the next time, so you can see this does tend to repeat itself. 04:45.820 --> 04:51.160 And as I draw these lines, you can see that there truly is an order to the market. 04:52.940 --> 04:57.200 You know, it's not as random as a lot of people think, think that it is now. 04:58.670 --> 04:59.780 Does this always work? 04:59.810 --> 05:00.620 Well, of course not. 05:00.650 --> 05:08.060 There are times where support and resistance fails, but at the end of the day, it gives you a guideline. 05:08.070 --> 05:13.280 So typically what we like to do is we like to say, OK, well, we have our lines, you know, we need 05:13.280 --> 05:16.760 a candlestick or some type of pattern or something to. 05:19.680 --> 05:24.600 Confirmed, so this breakdown in this hammer being formed on this daily candlestick. 05:25.870 --> 05:28.660 At this level confirms for us that there is support coming in. 05:29.230 --> 05:32.540 Another thing that you should pay attention to is on this kind of thing. 05:32.560 --> 05:33.670 There was a lot of volume. 05:33.670 --> 05:36.670 So that shows that there's real strength there. 05:36.670 --> 05:42.640 There's real conviction in buying or in this case, it could have been real conviction and selling. 05:42.640 --> 05:43.350 But guess what? 05:43.360 --> 05:46.690 They're losing money the next day, so they have to short cover. 05:47.740 --> 05:50.260 So there are a lot of different ways to look at this. 05:51.490 --> 05:57.070 But one thing you know, here's a here's a burish engulfing candlestick at 180, you know, the volume 05:57.070 --> 06:00.810 wasn't great, but it was a bearish candlestick. 06:01.150 --> 06:04.810 So this is a much better signal than this one. 06:04.810 --> 06:06.790 But both are certainly valid signals. 06:07.610 --> 06:10.660 Another thing that you want to pay attention to is that we've been in uptrend. 06:10.660 --> 06:16.120 So this may signal more of a pullback as opposed to a shorting opportunity because you always want to 06:16.120 --> 06:19.180 go with the trend over the longer term. 06:21.420 --> 06:23.940 Now, I'm going to go ahead and remove all of the lines. 06:25.070 --> 06:29.960 And talk about Fibonacci, so this case. 06:31.170 --> 06:38.640 I'll go ahead and use General Electric, Fibonacci is a mathematical. 06:41.870 --> 06:49.130 Formula that was discovered by a mathematician many centuries ago named, you guessed it, Fibonacci, 06:49.790 --> 06:57.050 and what he recognized is that there were patterns that repeated themselves throughout nature. 06:57.800 --> 07:06.890 Now, without going into the math, the idea is that you you have a trend up or down and typically they 07:06.890 --> 07:09.980 will pull back before they continue going higher. 07:10.010 --> 07:11.730 I mean, that's not a huge surprise. 07:12.530 --> 07:15.650 There are specific amounts that they pull back that matter. 07:15.650 --> 07:21.020 Now, 50 percent is not technically a Fibonacci number, but it is used on the tool because 50 percent 07:21.020 --> 07:23.960 is a lot of times people will get involved when it's called back halfway. 07:25.300 --> 07:32.470 There are other figures to be aware of, sixty one point eight percent of the move being pulled back 07:33.340 --> 07:35.350 and then the thirty eight. 07:39.440 --> 07:42.500 Point two percent Fibonacci retracement level and you can see. 07:44.590 --> 07:52.970 That on the way up from this low, we pulled back right here to the thirty eight point two percent Fibonacci. 07:53.410 --> 07:58.300 Now the tool is on the pitchfork menu and it is the retracement. 07:58.330 --> 08:01.950 Now, there are other forms of Fibonacci that you can get involved in. 08:02.470 --> 08:04.570 But in this case, we're just looking at the retracement. 08:04.570 --> 08:07.150 So the retracement from there was at the thirty eight. 08:08.430 --> 08:16.410 So, like I said, it works in both directions, so the last swinging high is what you want to draw 08:16.410 --> 08:17.010 this from. 08:18.730 --> 08:20.080 You are the last Plecki. 08:32.930 --> 08:40.250 This has actually had a minor Fibonacci retracement level, the seventy eight point six, this swing 08:40.250 --> 08:40.700 high. 08:42.050 --> 08:44.000 Can be extrapolated down to here. 08:44.990 --> 08:49.400 And then there's the thirty eight point two again, you can see that we fell and then we bounced a bit 08:49.400 --> 08:50.160 and sold off. 08:50.850 --> 08:53.720 So think of it as a guideline. 08:53.900 --> 08:57.590 There are some people out there that will use just Fibonacci. 08:58.380 --> 09:01.750 I don't think that's the best use of it. 09:01.760 --> 09:09.410 I think it is something that you want to perhaps get involved with. 09:10.870 --> 09:16.150 Adding it to some other form of analysis, like your support and resistance lines. 09:17.160 --> 09:20.670 Now, your fibonacci's should be drawn from either a swing higher, swing low. 09:21.610 --> 09:26.900 It gets clipped and dragged and then you just simply look at these areas for support. 09:26.920 --> 09:31.300 Again, though, I would caution against using it as your soul. 09:32.380 --> 09:33.160 Indicator. 09:34.550 --> 09:41.210 Now, that being said, if you combine an area of obvious support and resistance. 09:42.960 --> 09:44.970 On a longer term chart, especially. 09:46.830 --> 09:52.650 You can perhaps set up potential trades later, so if we are to pull back. 09:57.760 --> 09:58.780 In Apple. 09:59.990 --> 10:05.780 Down here, you can see that there is a clear support resistance area right around one hundred and eighty 10:05.780 --> 10:06.650 five dollars. 10:07.340 --> 10:14.420 So as we drift lower, Fibonacci traders and support resistance would both give you an idea as to, 10:14.420 --> 10:16.460 hey, this may be a great place to trade. 10:17.180 --> 10:22.910 You want to be looking for, you know, a hammer, a bullish engulfing candlestick, something like 10:22.910 --> 10:29.540 that, a three candle pattern, something along the lines of that to really kind of add to your thesis, 10:30.080 --> 10:33.560 because with trading the. 10:34.610 --> 10:41.090 Best trades are the ones that are based upon multiple reasons, you know, one thing that you will never 10:41.090 --> 10:48.320 see us do as professional traders is just to simply take a trade based upon one sole reason. 10:49.250 --> 10:55.840 So in this case, the 38 the 185 levels both look to be important, we're in an uptrend. 10:55.850 --> 11:00.260 So certainly you don't want to be a seller, even though, you know, we could drop 20, 25 dollars 11:00.260 --> 11:00.960 in the short term. 11:01.790 --> 11:04.250 Apple's been a winner for a very long time. 11:04.250 --> 11:06.850 So there's a very difficult thing to go against it. 11:06.860 --> 11:13.910 Just as in the chart, it's been losing money for, you know, hemorrhaging money for ages now under 11:13.910 --> 11:14.500 ten dollars. 11:14.510 --> 11:18.050 So you don't necessarily want to buy this based upon technical analysis. 11:18.740 --> 11:20.600 This is a sell only stock.