A support line is a line where prices stop falling down and move back up.
If the price of a certain security falls towards a support level it’s a test for that security. The support line will either be reconfirmed or wiped out. If the support line is confirmed then that means that a lot of buyers are buying this security. Because of that price of this security will rise and move away from the support line. If the support line gets wiped out it means that buyers didn’t invest in this security at the support line price level. As a result of that prices will keep on falling.
A resistance line is line where prices haves difficulties to go higher.
If the price of a certain security is going towards the resistance line then it will face a test. If the resistance line is confirmed the price of that security will go down. And if the resistance line is wiped out, the prices of that security will go higher.
When you have spotted a resistance line, try to figure out how strong that resistance line is. You can define the strength of resistance line by checking out how many times it have been tested and what the current market condition is of that security. If the market condition is in a downtrend or sideways then the resistance line will most likely be confirmed. In these market conditions you can make money by going short. However is the market condition is in the uptrend then chances are high that the resistance line will be wiped.
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