- Technical Analysis
- study price movement
- Fundamental Analysis
- analyzing economic, social, and political forces that may affect the supply and demand
- Sentiment Analysis
- able to gauge market sentiment aka sentiment analysis
Support & Resistance
- Support: Where a price tests a lower limit repeatably
- Resistance: where a price tests a upper limit repeatably
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- When the price passes through resistance, that resistance could potentially become support.
- The more often price tests a level of resistance or support without breaking it, the stronger the area of resistance or support is.
- When a support or resistance level breaks, the strength of the follow-through move depends on how strongly the broken support or resistance had been holding.
Trend lines
- Common form of Technical Analysis
- Join either 2 major top or bottom points and join them
- takes a 3rd point CONFIRMS trend
- Uptrend (join bottoms), Downtrend (join tops), Sideways
- Steeper is less reliable, most likely to break
- Get stronger the more consistent points they have
Channel:
- Draw a parallel line opposite a trend line = a channel
- can represent an opportunity for trading within the depth of the channel, can indicate potential support/resistance
Opportunities
Trade support or resistance after the bounce
- Don’t set trade on the support/resistance, set it after it has bounced with a safety stop/loss trade just outside the other (out) side of the support/resistance
Trade after a break in support/resistance is broken
- Conservative trading = Needs to be a positive/dramatic break with a stop/loss trade just inside the support/resistance
- Sometimes, other traders my have taken a position for the bounce, so when a break happens, it may return briefly, but then go for the break again as they liquidate their losing position. Best to wait for the price to break briefly, then return to the support/resistance point then break again
- Per the scenario above this can contribute to the previous support price becoming resistance and vice versa