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It is essential that you’re well aware of support and resistance points.
If not, you could be setting yourself up for abysmal failure.
Support represents the moment when buying begins to overwhelm selling and prices begin to bounce back. Resistance represents the moment when selling begins to overwhelm buying and prices begin to pivot.
Sometimes, simplicity is the best way to spot opportunity.
Here's an example. In early August 2018, shares of Weight Watchers (WTW) plunged $12 unexpectedly on an earnings overreaction. But the news really wasn’t worthy of such a gap lower.
Oftentimes, technical analysis is written off as worthless.
However, as it has been proven time and time again, it should never be ignored because it gives us a very clear, defined picture of fear and greed. Or, the very psychology that drives stocks.
With the incredibly popular Avengers: Endgame film, shares of Disney Co. exploded from a low of $107.50 to $142.50 in April 2019.
After the film grossed $1.2 billion in its opening weekend (biggest in history), analysts were still seen raising price targets. JP Morgan noted the stock could run to $150 a share by the end of the year.
When Munehia Homma first created candlestick charts in the 1700s, he had no idea it’d change the way we look at stocks 300 years later.
To him, candlestick charting was meant for the rice trade.
Now, when applied to technical analysis, it can help give us a clear picture of trader emotion.