Share Market Tips For Beginners

 This article will clear the concept of a very crucial topic of trading called support and resistance. These concepts are used by the expert advisory firm, TradeNexa, which provide expert Stock Future Tips. After learning the basics of trend lines in technical analysis, novice traders switch to technical topic of support and resistance. The support and resistance are two basic terms in the stock market. These are the most talked about attributes of technical analysis in the stock market. The support on a chart is a horizontal line that stops the price of the stocks to fall. The support in the chart is also referred to as the “floor”. Similarly, the resistance can be explained as the horizontal line that stops the price of the stock to rise. The resistance in the chart is also referred to as the “ceiling”. However, these horizontal lines are nothing more than a decision line of the price of the stock.

                                                                        Figure (1)

As shown in the figure (1), as the price falls down to the maximum then the traders consider it as buy orders because of the cheap price. The horizontal line touched by the price of the stock is said to be a support. As the prices rise up to the maximum then the traders consider it as sell orders because of the price rise.

Taking example more convenient to understand. Considering the following figure (2)
                                                                        Figure (2)
The pattern seems like a bouncing ball, which is bouncing from the floor to the ceiling. As one can observe that, the ball hits the floor and bounces. After bouncing, it hits the ceiling and drops down. Support and resistance is like floor and ceiling with changeable stock prices in between.

Taking one practical example of resistance lets gaze at the figure (3) illustrated below, the dotted line shows the resistance. Let us assume that this illustration is of Mr. X who has bought the share of Ashok Leyland, in March 2006. The price of stock fluctuates until November 2006. Peeping into the scenario, you will observe the price of the stock has reached up to level 39 in April and July. The price of the stock has not crossed the level 39, so this level is the resistance level of these occasions.

                                                                  Figure (3)
The prices of stocks on a chart, which act as a floor by stopping the price from being pushed downward. Now take one practical example of support and consider the figure (4). The skill to recognize a stage of support can also agree with a superior buying opportunity as this is the spot where traders notice good value and thus start to push prices higher again.
                                                                   Figure (4)

Support and Resistance Breakout:
When the breakout happens in the chart then resistance becomes support and support becomes resistance. Traders feel that the more support and resistance level is tested the better it is, as it creates more perplexity. 
As soon as the orders will be filled, the breakout will take place.

                                                                  Figure (5)
How to Identify Support and Resistance?
Trend lines can identify the support and resistance. Some of the traders use pivot point calculations to detect the support and resistance. The level gain importance as more and more the traders test it. When the price breaks out of a support level, then the support level turns into a new resistance level. On the other side, when the price breaks out the resistance level, then the resistance level turns into a new support level.