Talk:Support and resistance

Needs linking to stock trading
I've heard this term used. I think it's part of a system of trading stocks or predicting future stock prices. It needs to link into stock trading somehow and the model it is using (or it needs to be expanded enough to include it). Unfortunately, outside my area of competence. RJFJR 03:38, 20 Dec 2004 (UTC)

Support
In futures, support is an area where we expect contracts, will be bought. That is it. By itself it does not suggest any action. Both buying and selling influence prices. Having only one side of that does not indicate price direction. Just because buying comes in does not mean there is enough pressure to influence price. There is only one thing that can make prices go up and that is buying. Often we have an area bounded by what are called support and resistance. Very often we get divergence sell signals near resistance from various occulaters that lead us to believe that selling pressure is substantial and that a downtrend is enviable.

If people believe what is written here, they may be buying into heavier selling. Support will only slow a price decline if the selling is about the same, or less than the buying that is likely to take place. However, when there is substantial selling this area will not offer any support to falling prices. In fact professionals are depending on the miss informed public to not only buy, but also subsequently “cover their longs,” leading to still lower prices.

It seems to me it should not be the function of this post to lead sheep to the slaughter. A support area may be a place where we expect purchases will take place; it does not mean this is where a trader should buy. It does not mean prices will stop here or turn around here, although they might. GT

Numerology vs. fundamentals?
Is the notion of support and resistance based on either company's fundamentals or on the nature of markets (e.g., the distribution of individual traders' valuations of a security?) or is it just patterns people see in data. In other words, can a computer identify support and resistance or does it take an ordained analyst? —Ben FrantzDale (talk) 17:58, 6 December 2008 (UTC)


 * Yes, it is possible for a computer algorithm to identify the two levels.--Navin gupt (talk) 03:50, 15 December 2008 (UTC)

even by a small amount?
The article says:


 * However, once the price has passed this level, even by a small amount, it is likely to continue dropping until it finds another support level.

No, actually a small margin is permitted, as the example illustrates.--Navin gupt (talk) 03:50, 15 December 2008 (UTC)

No criticism?
E.g. in the German article to this topic they write that support and resistance are not scientifically backed concepts and subject of dispute. I think such a statement is warrented for the English article, too. --Felix Tritschler (talk) 13:00, 11 March 2022 (UTC)

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