To draw lines of support and resistance
lateral lines of support and resistance can be drawn using any interval of time five minutes chart 10
minute chart our Charke daily weekly and monthly chart the time frame to choose depends on whether you
are a daytrader swing trader or an investor.
Generally daily charts and at times weekly and monthly charts are the most useful when looking for support
and resistance.
The first thing to do is to open up a chart using that daily timeframe when looking at the chart to
go back and look at previous history six months one year.
We are five years
then look at areas in the chart where prices dropped touched several areas consolidated and then either
bounced back up or moved below it
connect those areas by drawing an audience on a line across the chart that lower line represents what
we call sport.
Every time the price touched the support line and it bounced back up the bulls were there to buy and
push the price higher
then look at areas in the chart where the price moved our ports touch several times consolidated and
then bounced back down or moved above it
connect those upper areas of consolidation by throwing a horizontal line across the shocked that upper
line represents what we call resistance.
Every time the price touched the resistance line and it bounced back down the guys were there to sell
and push the price lower.
Expand the chart to look at price action over the course of the past year or longer.
Find other major areas of support and resistance come back to the six month or three month timeframe
and analyze the current price action in relation to those lines of support and resistance.