SUPPORT AND RESISTANCE 2

We had discussed regarding trendlines in the beginning.Basically same principles applied here,the only difference being these are sloping lines as opposed to the horizontal lines discussed yesterday,but same principles.

 

At that time we had discussed about Uptrendlines and Downtrendlines.The Uptrendline acts as Support each time prices decline and come towards it.So too the downtrendlines act as resistance as prices rally to the trendlines and fall from it.Example in the attachment below of DELL.Prices hit the downtrendline and resume its decline.Therefore the dntrendline acts as Resistance.

So too with an uptrend……….

 

And as was discussed regarding the breakout over resistance and breakdown below support,the same applies here.We have an uptrendline,we have prices taking support at this trendline.And as the trendline breaks,we say that the uptrend is in question.

 

A break in an Uptrendline is not a Downtrend………it merely tells us that this uptrend that we have been trading and making profits from is now in question.So too with the Downtrendline.A breakout above the downtrendline does not mean that the stock is now in an uptrend,it merely means that the downtrend is now in question.

 

To assess uptrends and downtrends,we are back to pivot highs and pivot lows as has been discussed.