How to know resistance levels of a stock price?
Hi, I want to have some idea of how to make a trendline to understand resistance levels in a stock price. Can we get an idea of trendline through the use of Bollinger bands and MFI?? Plz help...
- 1 decade agoFavorite Answer
Trendlines are imaginary lines that connect previous highs or lows.
For example, stock A hit a high of 10 and a low of 5 for the first 10 mins of trading then hit another high of 12 and fell to a low of 7 in the next 10 mins and is currently trading at 9.
If you draw a line at the highs (10 and 12), that represents the resistance level, while if you draw a line at the lows (5 and 7), that represents support.
In the example, there are three resistance levels. First is the 10, then the 12, then the axis where the price and the resistance trendline meet which is approximately 14. Same thing apply with the support level of 5, 7, and approximately 9.
Regarding the bollinger band, yes it also do the same thing as in trendlines except that it uses averaging instead of a straight line. If you really want to use the charts in trading, you can look for sites on Technical Anaylysis and Elliot Waves.
- 1 decade ago
The repeated peak value either down or up with reversal of trend.