In this video we'll take a look at one of the most basic aspects of trading and that is going to be
support and resistance.
So support and resistance is exactly what it sounds like it is support for price or resistance.
The price.
So for example a place where price will drop below.
So that is support there as the market continues to find buyers in this general vicinity.
Just as this was resistance as the markets kept trying to break above there but could not actually accomplish
that.
Now support and resistance tends to form at large round figures and as a result you can use that to
your advantage in order to do this on Trading View.
You click on the line tool the horizontal line tool and you just place it right on the chart.
You can drag from the oval here and this brings up something a bit interesting.
So as you can see again right click this and go down to the settings the coordinates.
I can make it to 40 even in most the time you will find that price tends to respect these round numbers
like I said.
Now there is an area that has been supportive a little bit of a range here just below 240.
And as we broke higher in a theory I'm on the daily chart.
We finally plunge through it and it offered resistance.
You quite often see that it's market memory.
So what I use to illustrate this a lot of times will be the idea of a high rise.
So say you got four floor here floor one floor to floor three or four and if you take the stairs or
the elevator up to the second floor what was once the ceiling now becomes your floor just as if you
dropped from the fourth floor to the third floor.
What was once your floor becomes the ceiling.
It's kind of the same thing in technical analysis.
We go ahead and draw a couple other lines and you will see that as I draw these out it becomes apparent
that this market theorem seems to like these levels right around every 40 dollars or so.
You can make an argument for these are areas you should be trading from quite often what people will
do is they'll look for support or resistance in the marketplace on higher timeframes and then perhaps
drill down to a lower timeframe to see how it behaves.
That's getting a little ahead of where we're at now.
But what this does suggest to you is that markets in fact are not random and they do have a little road
map kind of like post and signs you can think of it as opening up a map.
Seeing that there are directions there are turns and twists in the road very similar here by simply
drawing these four lines you can see how different the market suddenly looks and you will find that
this is the case in pretty much anything you draw.
So this is the letter X.
This is U.S. Steel common stock.
Can go ahead and draw that there and I.
Right click on the circle.
Click on settings can change at twenty five to make it twenty five even you can see that price does
seem to respect that.
That will support it finally broke down and look it became resistance later.
That's that changing floors kind of analogy that I put.
So let's take a look at twenty dollars for example.
You can see that the market certainly respected this.
You can also see that it's not to the penny.
It's a general idea.
So that's where you mix in technical analysis with trend analysis.
Maybe candlestick analysis at these crucial areas.
You know you don't just go in and start selling or shorting at 20 dollars expecting it to never go to
20 dollars in one cent it's just a guideline.
But some important resistance without a doubt probably one of the most basic if not the most basic actual
basic form of technical analysis but it's also one of the most crucial and in fact a lot of professional
traders simply will mark up their charts like you're seeing me do here and then look for the right candlestick.
Now we're going to marry that with the idea of Fibonacci retracement and extensions and we'll see how
that works down the road.
But I want you to has a little bit of a homework assignment open up as many charts as possible just
like you see me doing here and draw lines and see what you notice.
See that it repeat.
See that these are areas that are support and resistance over time.
You'll notice that it breaks up the chart in very symmetrical patterns.