Technical Analysis

Technical Analysis is using past stock movements to predict future stock movements. It is a strategy used to identify when to enter or exit a trade. One way we can do this is by using Support and Resistance. They are imaginary lines that tell when the stock is at its highest (Resistance) and when it is at its lowest (Support).

When a stock hits Support it will typically go up to Resistance and when a stock hit Resistance it will typically go down to Support. Let us look at the below example....

As you can see the stock, SLR, stays between $3.15 (Support) and $3.50 (Resistance). Every time it goes up to $3.50 it comes down to $3.15 and every time it goes down to $3.15 it typically goes up to $3.50.

A swing trader using technical analysis may buy the stock close to support. As in the example above, they would buy the stock at $3.16 and sell it once it moves closer to the resistance of $3.50.

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Also remember if a stock breaks out of its support and resistance range it is considered a break out and will probably continue to move away from it's old pattern. In this case you would want to get out of the trade and cut your loses short. Other Technical Analysis techniques are MACD Stochastics Volume Candle Sticks and Moving Average. To learn more click on their name/links.

Remember to always trade with the trend never against it. "the trend is your friend"

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