THE ETERNAL SOVEREIGN

Tag: support and resistance

  • Channel Line

    A channel line (or price channel) is a technical analysis tool used to show the direction of a market trend and the range where price tends to move.

    How Traders Use Channel Lines

    • Buy near support, sell near resistance
    • Identify trend strength
    • Spot breakouts (price breaks outside the channel)
    • Combine with:
      • Candlestick patterns
      • RSI / MACD
      • Volume

    Key Notes

    ⚠️ Channel lines are dynamic, not fixed
    ⚠️ False breakouts can happen
    ✅ Best used with confirmation tools

  • Support and Resistance

    Support and Resistance are core concepts in technical analysis used to identify key price levels where the market tends to react.

    Support

    Support is a price level where buying interest is strong enough to stop or slow down a price decline.

    At support:

    • Demand > Supply
    • Price often bounces upward
    • Buyers consider the price “cheap” or attractive

    Resistance

    Resistance is a price level where selling pressure is strong enough to stop or slow down a price increase.

    At resistance:

    • Supply > Demand
    • Price often pulls back downward
    • Sellers consider the price “expensive”

    Why Support & Resistance Matter

    They help traders:

    • Identify entry points (buy near support, sell near resistance)
    • Set stop-loss and take-profit levels
    • Understand market psychology
    • Anticipate breakouts or reversals

    Key Characteristics

    • Support and resistance are zones, not exact lines
    • Old support can turn into resistance, and vice versa
    • Stronger when tested multiple times
    • More reliable on higher timeframes