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Support and resistance

Support and resistance is a concept in technical analysis that the movement of the price of a security will tend to stop and reverse at certain predetermined price levels.  

Support Level

A support level is a price level where the price tends to find support as it is going down. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely to continue dropping until it finds another support level.

Resistance Level

A resistance level is the opposite of a support level. It is where the price tends to find resistance as it is going up. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely that it will continue rising until it finds another resistance level.


Using support and resistance levels

If a stock price is moving between support and resistance levels, then a basic investment strategy commonly used by traders, is to buy a stock at support and sell at resistance, then short at resistance and cover the short at support as per the following example:



If a price breaks past a support level, that support level often becomes a new resistance level. The opposite is true as well, if price breaks a resistance level, it will often find support at that level in the future.  

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Use Support & Resistance Line approach to judging entry and exit investment timing.



Establishing trend lines is important to choose a chart based on a price interval period that aligns with your trading strategy.
Short term traders tend to use charts based on interval periods,
such as 1 minute (i.e. the price of the security is plotted on the chart every 1 minute),
with longer term traders using price charts based on hourly, daily, weekly and monthly interval periods.

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SUPPORT LEVEL
যখন কোন শেয়ারের Price বার বার নিচের দিকে যে Price এ নেমে এসে পুনরায় উপরের দিকে বাড়তে থাকে, তখন নিচে বার বার নেমে আসা  Price যে  Level বা স্তর
তৈরী করে; সেই  Level বা স্তরকে SUPPORT LEVEL বলে।

RESISTANCE LEVEL
একইভাবে,  যখন কোন শেয়ারের Price বার বার উপরের দিকে যে Price এ উঠে পুনরায় নিচের দিকে পড়তে থাকে, তখন  বার বার উঠে আসা  Price যে  Level বা স্তর তৈরী করে; সেই  Level বা স্তরকে RESISTANCE  LEVEL বলে।

http://upload.wikimedia.org/wikipedia/en/thumb/c/c2/MicrosoftSupportResistanceTradingChannelChart.JPG/500px-MicrosoftSupportResistanceTradingChannelChart.JPG

উপরের চিত্রে একটি কোম্পানির বিগত ৫ বৎসরের সাপ্তাহিক Price Chart দেখিয়ে এর Support & Resistance Line দেখানো হয়েছে।  

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Any AFL (amibroker)  for support or resistance ?