WEBVTT 00:02.940 --> 00:07.800 In this video we'll take a look at one of the most basic aspects of trading and that is going to be 00:07.800 --> 00:09.330 support and resistance. 00:09.540 --> 00:16.740 So support and resistance is exactly what it sounds like it is support for price or resistance. 00:16.740 --> 00:17.250 The price. 00:17.270 --> 00:22.260 So for example a place where price will drop below. 00:22.260 --> 00:28.640 So that is support there as the market continues to find buyers in this general vicinity. 00:28.830 --> 00:37.830 Just as this was resistance as the markets kept trying to break above there but could not actually accomplish 00:37.830 --> 00:38.210 that. 00:38.880 --> 00:50.370 Now support and resistance tends to form at large round figures and as a result you can use that to 00:50.370 --> 00:54.760 your advantage in order to do this on Trading View. 00:54.760 --> 01:00.270 You click on the line tool the horizontal line tool and you just place it right on the chart. 01:00.300 --> 01:07.570 You can drag from the oval here and this brings up something a bit interesting. 01:07.620 --> 01:15.950 So as you can see again right click this and go down to the settings the coordinates. 01:16.020 --> 01:23.640 I can make it to 40 even in most the time you will find that price tends to respect these round numbers 01:23.640 --> 01:24.760 like I said. 01:24.840 --> 01:31.340 Now there is an area that has been supportive a little bit of a range here just below 240. 01:31.530 --> 01:34.130 And as we broke higher in a theory I'm on the daily chart. 01:34.140 --> 01:37.670 We finally plunge through it and it offered resistance. 01:37.740 --> 01:40.440 You quite often see that it's market memory. 01:40.440 --> 01:47.070 So what I use to illustrate this a lot of times will be the idea of a high rise. 01:47.100 --> 01:56.220 So say you got four floor here floor one floor to floor three or four and if you take the stairs or 01:56.220 --> 02:03.140 the elevator up to the second floor what was once the ceiling now becomes your floor just as if you 02:03.140 --> 02:05.690 dropped from the fourth floor to the third floor. 02:05.690 --> 02:09.920 What was once your floor becomes the ceiling. 02:09.920 --> 02:13.410 It's kind of the same thing in technical analysis. 02:13.460 --> 02:22.740 We go ahead and draw a couple other lines and you will see that as I draw these out it becomes apparent 02:22.800 --> 02:32.170 that this market theorem seems to like these levels right around every 40 dollars or so. 02:32.310 --> 02:38.400 You can make an argument for these are areas you should be trading from quite often what people will 02:38.400 --> 02:45.180 do is they'll look for support or resistance in the marketplace on higher timeframes and then perhaps 02:45.300 --> 02:49.570 drill down to a lower timeframe to see how it behaves. 02:49.800 --> 02:51.960 That's getting a little ahead of where we're at now. 02:52.260 --> 02:59.700 But what this does suggest to you is that markets in fact are not random and they do have a little road 02:59.700 --> 03:07.410 map kind of like post and signs you can think of it as opening up a map. 03:07.410 --> 03:14.370 Seeing that there are directions there are turns and twists in the road very similar here by simply 03:14.370 --> 03:21.540 drawing these four lines you can see how different the market suddenly looks and you will find that 03:21.540 --> 03:25.350 this is the case in pretty much anything you draw. 03:25.380 --> 03:26.640 So this is the letter X. 03:26.640 --> 03:30.060 This is U.S. Steel common stock. 03:30.090 --> 03:33.040 Can go ahead and draw that there and I. 03:33.150 --> 03:35.640 Right click on the circle. 03:35.640 --> 03:41.820 Click on settings can change at twenty five to make it twenty five even you can see that price does 03:41.820 --> 03:43.050 seem to respect that. 03:43.050 --> 03:47.470 That will support it finally broke down and look it became resistance later. 03:47.490 --> 03:50.870 That's that changing floors kind of analogy that I put. 03:51.000 --> 03:53.640 So let's take a look at twenty dollars for example. 03:53.700 --> 03:56.250 You can see that the market certainly respected this. 03:56.250 --> 03:59.260 You can also see that it's not to the penny. 03:59.400 --> 04:00.510 It's a general idea. 04:00.510 --> 04:05.720 So that's where you mix in technical analysis with trend analysis. 04:05.730 --> 04:09.240 Maybe candlestick analysis at these crucial areas. 04:09.360 --> 04:15.750 You know you don't just go in and start selling or shorting at 20 dollars expecting it to never go to 04:15.750 --> 04:19.170 20 dollars in one cent it's just a guideline. 04:19.200 --> 04:27.600 But some important resistance without a doubt probably one of the most basic if not the most basic actual 04:27.600 --> 04:35.310 basic form of technical analysis but it's also one of the most crucial and in fact a lot of professional 04:35.310 --> 04:42.200 traders simply will mark up their charts like you're seeing me do here and then look for the right candlestick. 04:42.210 --> 04:50.040 Now we're going to marry that with the idea of Fibonacci retracement and extensions and we'll see how 04:50.040 --> 04:52.020 that works down the road. 04:52.020 --> 04:58.440 But I want you to has a little bit of a homework assignment open up as many charts as possible just 04:58.440 --> 05:04.020 like you see me doing here and draw lines and see what you notice. 05:04.030 --> 05:05.610 See that it repeat. 05:05.610 --> 05:10.990 See that these are areas that are support and resistance over time. 05:11.010 --> 05:15.420 You'll notice that it breaks up the chart in very symmetrical patterns.