[Must-know! ] Awareness of resistance and support? ~ Horizontal line Part ② ~ [Line Analysis Basics Course #2]
Hello! This is SAKU!
This time,the previous article continues with an explanation about horizontal lines!
Before diving into the explanation of the line that can be drawn around the regression/support (resistance/support) pivot, which we skipped in the previous article, first I would like to explain the resistance line and the support line. I would like to explain them.
These concepts are essential not only for line analysis but for learning technical analysis as a whole, so let's understand them properly!
Support Line and Resistance Line
・Support Line (support line)
Support Linerefers to a line that supports the downward movement (the valley) of price.
When a line provides support (support), it means thatbuying pressure from buyers, profit-taking on long/short positions, or even buy orders to cover short positionsentered near that line.
・Resistance Line (resistance line)
Resistance Linerefers to a line that suppresses the upward movement (the peak) of price.
When a line provides resistance (resistance), it means thatnew selling pressure, profit-taking on long positions, or even sell orders to cover long positionsentered near that line.
Note here that the terms support and resistance do not exclusively refer to horizontal lines; they are used for lines in general, including trendlines (to be learned later), referring to their roles as support or resistance, or the actions and awareness around them.
I know this is hard to grasp in words, so please look at the figure below.
“Awareness of resistance and support”
Buying and Selling Mindset in Light of Support and Resistance
Next, regarding support and resistance, let's examine how the mindset to buy and sell changes along those lines! Please look at the diagram below.
・Example of buying/selling mindset when considering support/resistance (during an uptrend)
“Buying and selling mindset when considering support/resistance”
As in the diagram, outside the supported line, for example, the area where the line cannot be broken,buying pressure from buyers accumulates as they cut losses. (The opposite for resistance)
And when that line is broken through,the loss-cutting orders (selling orders) and profit-taking, or new orders (selling orders) around the break direction, will pull the price in the accelerated direction. This is what is called a breakout.
It’s not just that the line was broken! We should also considerwhat it means that the line was broken and think about it.
Regisaポ（Support/Resistance) Turnaround
As a line acts as a turning point, the roles of resistance (resistance line) and support (support line) change,this is called a regime shift between resistance and support (Support-Resistance Turnaround). It is also called a roll reversal.
For example,a line that was previously regarded as support often becomes resistance after a break.
The movement where the price breaks the line and then returns toward the original line isa return move.
The flow of resistance/support turnaround is
① Break the resistance line
→② Return move
→③ The resistance line that was broken then functions as support and continues to extend in the broken direction
.
and when a support line breaks and turns into resistance → support/resistance turnaround
(I don't care much about the naming as long as I understand the roles, but I personally prefer these terms).
Line drawn at the point of Regisaポ (Support/Resistance) Turnaround
I have explained resistance and support at length up to this point, so I will keep the main topic—the line drawn at the point of the support/resistance turnaround—brief!
In short, draw a horizontal line at the Regisaポ (Support/Resistance) turnaround!
When you apply it to an actual chart, it looks like this below. ↓
“Resistance & Support Lines”
This marks the end of the explanation on where to draw horizontal lines for the previous article for now!
This Regisaポ is very important, so on the chart, find where Regisaポ turns, draw the line, and think about it a lot!
In line analysis, it's important not only to memorize the lines and the patterns but also to consider why they occur from the perspective of trading mindset and incorporate that understanding!
If you want to learn line analysis thoroughly from the basics to develop more advanced and repeatable trading skills, check this as well! ↓
The Essence of MTF Multi-Timeframe Analysis
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