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Support & Resistance
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Uptrend Lines
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Downtrend Lines
Support & Resistance
Support and resistance are generally somewhat horizontal. Support acts like a floor for stock prices (reversing the previous downward move). Resistance acts like a ceiling (reversing the previous upward move). See the example below of Wal-mart stock.
Uptrend Lines
Uptrend lines slope upward and connect the major low points. Buying near the uptrend line with stops below can be a great way to trade with the trend. See the uptrend line of Lockheed Martin below. An uptrend is usually confirmed as being broken when a body of a candle closes below the trend line.
Downtrend Lines
On the other hand, a downtrend is drawn by connecting the major highs together as shown below. See the downtrend line on Ford stock. There’s no need to buy a stock that’s in a clear downtrend. It will typically break the downtrend and go sideways for a bit before turning upward or heading downward again. A downtrend is usually confirmed as being broken when a candle closes above the downtrend line.