why supports & resistances work (words from masters)

"A very significant part of the reason

prices appear to “bounce”off

support and resistance levels

is that many traders have observed

this effect and expect to see it in the future!

--

Therefore,

support andresistance is partly

a self-fulfilling prophecy.

Traders buy at support levels

in expectation of the rise in prices

due to the support itself.

--

Traders sell at resistance levels

in expectation of the decline in prices

due to the resistance itself.

--

When multiplied,

these effects make support and resistance

one of the most powerful concepts intrading.

The behavior of market participants

reinforces the effects themselves."



- Curtis Faith

Crumple zones of stock market!

Just like every car has "crumple zone"

- a criss-cross webcage of joints and steel members

which bend and absorb the energy generated by the impact in case of an accident

stock market charts too have crumple zones in the form of

supports and resistances.

Whenever there is an accidental or incidental fall or rise

the tremendous energy generated is absorbed by at these

support and resistance points

as a result of which a free fall or free rise is prevented.

This acts as a safety system for those who are caught on the wrong foot.

Whenever there are no support or resistance levels between two points

expect destructive energy to land on the traders caught in-between!

So, those who have nightmares about "circuits"

can take some heart from these crumple safety zones in the stock market.

But, remember, when you see yourself saved by the crumple zone in front of your nose, treat it as time given to you to eject. Crumple zone chain reaction may finally stop only after you!

Check your stock or index for these today!