WEBVTT 00:01.310 --> 00:08.270 Hi everyone and welcome back to this wealthy education video on how to use support and resistance support 00:08.330 --> 00:14.250 is a price which a stock trades down to and then generally moves up in price. 00:14.300 --> 00:22.720 If you look at our graph on the left the stock has moved down to the support level and is now trading 00:22.750 --> 00:25.850 or bouncing up off of support. 00:26.010 --> 00:32.940 The stock then trades up to what is called a resistance level and that is a price which a stock trades 00:33.000 --> 00:36.640 up to and then generally moves down in price. 00:37.110 --> 00:42.990 And then the stock trades back down to the support level where it will generally move up in price from 00:42.990 --> 00:44.010 that level. 00:44.120 --> 00:53.800 And I say generally because a stock will go through both support and resistance and this can happen 00:53.800 --> 00:56.140 on a fairly regular basis. 00:56.320 --> 01:01.930 But we can use support and resistance to provide sell and buy signals and our stock. 01:01.960 --> 01:08.890 They provide areas where there is a higher percentage chance that the stock will move either up or down 01:09.220 --> 01:16.520 depending on whether it is that support or resistance a break of support or resistance may signal a 01:16.520 --> 01:17.840 strong move. 01:18.780 --> 01:23.010 And the continued direction of the break for the stock. 01:23.120 --> 01:30.200 So a break through support may indicate that the stock is going to move down at a break above resistance 01:30.470 --> 01:33.060 may indicate that the stock is going to move up. 01:33.080 --> 01:40.580 The longer a support or resistance level is in place the more important the signals that the support 01:40.610 --> 01:48.690 or resistance level provides say multiday support level is more important than a multi-hour level and 01:48.690 --> 01:56.670 a multi-week level of support or resistance is more important than a daily level of support and resistance. 01:56.670 --> 02:01.110 You can have both major and minor levels of support. 02:01.140 --> 02:07.010 The Major would be at the higher timeframe and in place for a longer period of time. 02:07.080 --> 02:15.150 And then you can have minor levels of support and resistance in shorter timeframes or these can be set 02:15.150 --> 02:19.620 up within major levels of support and resistance. 02:19.650 --> 02:23.860 So let's look at support and resistance on the chart. 02:24.020 --> 02:29.990 We're going to start with a chart and tell and here I've entered INTC on the upper left portion of the 02:29.990 --> 02:30.640 chart. 02:30.740 --> 02:38.330 It's a daily chart we're using candlesticks and I'm going to draw a support and resistance level at 02:38.330 --> 02:41.060 the beginning of this chart here. 02:42.300 --> 02:43.920 We have a resistance level 02:47.970 --> 02:49.470 here. 02:49.570 --> 02:58.600 We have our support level as we can see the stock traded in this range between resistance and support 02:59.020 --> 03:00.470 for more than a year. 03:00.520 --> 03:03.160 This is September of 2016. 03:03.850 --> 03:07.440 All the way up through September of 2017. 03:07.630 --> 03:13.980 This is an example of how important it is when a long term support or resistance level is broken. 03:13.990 --> 03:21.760 So when the stock broke through this resistance level right around $38 you can see the stock then made 03:21.760 --> 03:24.370 a huge move to the upside. 03:25.140 --> 03:28.830 Eventually reaching right around $57. 03:28.990 --> 03:35.750 So the stock had been trading in this range or consolidating for over a year. 03:36.120 --> 03:41.850 And when the stock broke through resistance it made a large move. 03:41.850 --> 03:47.700 One of the reasons stocks make large moves when breaking support or resistance is because the stock 03:47.700 --> 03:53.580 is doing something that most investors do not expect at a resistance level. 03:53.580 --> 04:00.240 You expect the stock to turn back down and move lower and a support level. 04:00.330 --> 04:03.320 You expect the stock to bounce or move up. 04:03.330 --> 04:09.840 All of that support level what a stock breaks through a resistance level investors that have sold the 04:09.840 --> 04:16.020 stock at this level thinking that the stock is going to go down now must re-enter the stock causing 04:16.020 --> 04:20.340 it to move up and the same thing with a break of a support level. 04:20.340 --> 04:22.990 Now let's take a look a little closer in time. 04:23.040 --> 04:29.640 So we're going to use multiple time frame analysis to look at how we might want to trade Intel today 04:29.640 --> 04:31.910 if we were going to enter the stock. 04:32.190 --> 04:35.700 So we have those support and resistance levels in the past. 04:35.700 --> 04:37.760 And now the stock is trading higher. 04:37.890 --> 04:48.980 So we have a support level just about 42 that we'll draw on and then we're going to zoom in to an hourly 04:48.980 --> 04:49.490 chart. 04:51.050 --> 04:56.550 And here we can see that there are support and resistance levels on the hourly chart as well. 04:58.910 --> 05:07.020 Right around forty nine is our resistance level and our support level remains here just above 42. 05:07.030 --> 05:09.930 This is our major support level. 05:10.110 --> 05:16.310 If we zoom out we'll see that this is a minor resistance level. 05:16.400 --> 05:28.210 I will go back to a daily chart where we see the minor resistance level as the stock is bouncing up 05:28.560 --> 05:30.080 and a downtrend. 05:30.130 --> 05:40.960 Our major resistance level at this point would be the high that the stock reached just below 58. 05:41.000 --> 05:46.400 So there we have an example of a major and minor resistance level early in the chart. 05:46.400 --> 05:53.340 We saw a break of the resistance level and the stock move up strongly to this 58 level. 05:53.470 --> 06:02.690 We now have a major support level in place just above 42 which stock has touched several times. 06:02.710 --> 06:13.030 And early 2018 and in October 2018 and we have a minor resistance level right around 49 where the stock 06:13.030 --> 06:17.020 has bounced up 2 after touching support just about 42. 06:17.170 --> 06:24.010 So that's an example of support air resistance and the stock up until and this video we talked about 06:24.610 --> 06:31.090 resistance and support levels that we could draw horizontally and those work well when a stock is not 06:31.090 --> 06:33.460 moving in an uptrend or downtrend. 06:33.670 --> 06:40.540 But in a consolidation range and our next video will talk about an exponential moving average which 06:40.540 --> 06:46.280 is a way to draw a support resistance level when a stock is trending either up or down. 06:46.420 --> 06:48.250 I look forward to seeing you in the next video.