Predicting Prices With Support And Resistance by Thomas N. Bulkowski
Support and resistance are important chart patterns. Read this to find out why.
I consider support and resistance (SAR) the most important chart patterns. Why? By finding SAR, you can predict how far prices might climb and how far they might fall before you trade. Isnít that worth something? Thatís like a blackjack dealer sneaking a peek at the top card in the deck and telling you to take it because youíll win. Is he pulling your leg? Does support and resistance work? Letís find out.
First, some definitions. Support occurs when increased demand for a security builds a floor under prices. A support level or zone appears when buyers miss purchasing a stock and vow to buy it should prices decline to the same, or nearly the same, level.