One: Simple judgment of support and resistance:
Support and resistance levels are the points on the chart that experience continuous upward or downward pressure. The support level is usually the lowest point in all chart modes (hourly, weekly, or yearly), and the resistance level is the highest point (peak point) in the chart. When these points show a recurring trend, they are identified as support and resistance. The best time to buy/sell is near the support/resistance level that is not quickly broken. Once these levels are broken, they will tend to become reverse obstacles. Therefore, in an uptrend market, the split resistance level may become support for an upward trend; however, in a downtrend market, once the support level is broken, it will turn into resistance.
Two: Line and channel recognition
Trend lines are simple and practical tools in identifying the direction of market trends. The upward straight line is formed by connecting at least two consecutive low points. Naturally, the second point must be higher than the first point. The extension of the straight line helps to determine the path the market will follow. Uptrend is a specific method used to identify support lines/levels.
Conversely, the downward line is drawn by connecting two or more points. The variability of transaction lines is, to some extent, related to the number of connection points. However, it is worth mentioning that the facts do not have to be too close. A channel is defined as an upward trend line parallel to the corresponding downward trend line. Two lines can represent a corridor where prices are up, down, or horizontal. The common attributes of a channel that supports trend line connection points should be located between the two connection points of its reverse line.
Three: Recognition and understanding of the average line:
If you believe in the philosophy of "the trend is your friend" in technical analysis, then the moving average will benefit you a lot. The moving average shows the average price at a specific time in a particular period. They are called "moving" because they are measured simultaneously and reflect the latest standard.
One of the disadvantages of moving averages is that they lag behind the market, so they are not necessarily a sign of trend change. To solve this problem, using a short-period moving average of 5 or 10 days will reflect recent price movements better than a 40 or 200-day moving average. Alternatively, a moving average can also be used by combining two standards with different periods. Whether the five and 20-day moving averages or the 40- and 200-day moving averages are used, a buy signal is usually detected when the shorter-term average crosses the longer-term average upwards. In contrast, a sell signal will be prompted when the shorter-term average crosses the longer-period average downward.