How do you understand support and resistance lines?

When the exchange rate in the market reaches a certain level, it often does not continue to rise or fall. It seems that there is a resistance line that blocks or supports the exchange rate at this price, which we call resistance line and support line respectively. The so-called resistance line means that when the exchange rate rises to a certain height, there is a large supply of selling orders or weak buying orders, which hinders the continued rise of the exchange rate. The support line means that when the exchange rate falls to a certain height, the buying momentum becomes stronger and the selling momentum becomes weaker, so that the exchange rate stops falling. From the perspective of supply and demand, "support" represents concentrated demand, while "resistance" represents concentrated supply. Changes in the relationship between supply and demand in prices have led to restrictions on exchange rate changes.

Both resistance and support lines are important methods of graphical analysis. Generally, if the exchange rate fluctuates up and down in a certain area, and the cumulative trading volume in this area is extremely large, then if the exchange rate breaks through or falls below this area, it will naturally become a support line or a resistance line. These price levels that have had large trading volumes often change from resistance lines to support lines or from support lines to resistance lines: once the resistance line is crossed, it will become the support line for the next downtrend; , will become the resistance line for the next uptrend.

On the K-line chart, as long as the lowest price occurs multiple times in the same micro-range, connect the two same lowest prices and extend them to form a support line, which vividly describes the imbalance in which demand exceeds supply within a certain price range state. When the transaction price falls into this range, the seller is reluctant to sell due to the surge in buying momentum, which makes the price turn around and rise. Its inner essence is: due to the repeated occurrence of this price range in the previous stage, a relatively large trading volume has been accumulated. When the market moves closer to the support line from top to bottom, the short-sellers have cleared their profit chips and have no short-selling chips in their hands; Those who are long hold coins to take advantage of the low price to form a demand; those who are indecisive are deeply locked in, and their chips are locked and it is not easy to liquidate their positions. Therefore, the supply in this price range is less than the demand, which naturally forms a strong support base. In addition, since the market has turned back here many times, the psychological support price range of the majority of investors has also been established. As long as there is no bad news, the market will be supported and rebound.

Technical analysis defines the price range with a large cumulative trading volume as a "transaction-intensive area", that is, there is a high turnover rate in this intensive area. Buyers in dense areas need to wait for the exchange rate to rise above this cost range if they want to make a profit. These buyers are those who hold chips. As long as they do not lose confidence in the market outlook, they will not sell chips in this price range. Just because those who hold chips are reluctant to sell, it is difficult for the market to fall below this price. On the other hand, the short side is also short of chips due to intensive transactions and rising currency holdings. That is, the supply of chips in the market has shrunk. Although there will still be some people who lose confidence in the market outlook, they will still sell chips, but it will not be successful. Even if the support line is temporarily broken, as long as there is no coordination of trading volume and no various negatives, the price will return to above the support line, and the psychological support of the majority of investors will be strengthened again.

After the market obtains temporary support in the transaction-intensive area, there are two possibilities for the market outlook: one is to rebound and rise; It was effectively broken, and the market continued to decline.

You go to climb the Great Wall on National Day, isn’t there a lot of people? This is support and resistance.

You go to climb the Great Wall on non-weekends in winter, is there anyone? There will be no support and resistance

Open the disk and look to the left, where there are many people is the range of resistance and support​