Every stock rises till it hits the resistance ceiling above! At that point it reverses direction!
Every stock falls till it hits the support floor below! At that point it rebounds!
One of the most popular strategies of traders is =
"Buy at support and Sell at Resistance."
This works!
Because everyone thinks that way...together!
There is another logic behind this happening.
Stock movements are like pendulum; they overshoot due to sentiments and momentum.
Owing to this tendency, near "Resistance" the stock is generally overbought and near "Support" the stock is generally oversold.
If you buy at support and sell at resistance and do all this with strict stop loss you can, make decent living from stock trading!
Now, take this technique a little forward...
What happens if the stock breaks the Resistance ?!!!
The next resistance is some distance away.
The resistance just broken becomes the nearest support.
Everyone sees this logic and smells money.
What happens thereafter is nothing less than the launch of a rocket!
And rockets take time to stop.
The stock rises like there is a mad dog after it!
(Similar thing happens when a stock breaks the support.)
So, here is the technique-
Keep looking for the rising and falling stocks everyday after trading hours.
and shortlist the ones which have just broken the resistance or support or are about to break!!!
And the moment "it" happens just jump on the train for a great ride!
The birds have broken free from the cage...ready to soar!
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