How to Analyze Stock Charts Using Support and Resistance

For many traders and investors, mastering the art of reading stock charts is essential for making money when buying and selling stocks. Let's take a look at one important feature when studying stock charts.

Price Support and Resistance - You can determine a stock's price support and price resistance by looking at the history of the stock price movement over time. For price accountants in Durham you will need to determine if there is a certain amount that the stock has fallen to several times over the past 6-months to 1-year, for example. For price resistance, you will need to determine if there is a certain amount that the stock has risen to several times over the past 6-months to 1-year.

Identifying these two thresholds - the high point and the low point - and then casting a horizontal line through both the upper and lower points will help you determine where within this channel the current stock price is. This visual channel will also help you gage the potential gain or loss from the stock before you buy into it.

Additionally, if you do buy the stock, the price support can tell you when to sell your holding. For example, if your stock falls below its historic price support level, you may want to dump it has soon as you can, depending upon your pre-set policies. On the other hand, if you spot a stocking rising above its price resistance level, you may use that as an indicator that it is a good time to buy into it.

People who are "in it for the long term" (i.e. they buy a solid stock and hold onto it, through highs and lows, for several or many years) usually hire brokers to analyze stocks for them. Many of these brokers will use fundamental analysis primarily. For example, they look at a company's sales, profits, profit margin, P/E ratio and so forth. While fundamental analysis has its place, stock chart analysis can often reveal "better" information more rapidly.

People who are looking to make money by 'buying low and selling high' need to learn how to do this themselves. Even if you are a beginner, you can learn basic principles of stock charts analysis that will help you master this art with a little bit of practice.

Plotting the support and resistance for a particular stock price is easy and can reward you immensely without spending a lot of time in your analysis.

Author Bio:
John is the sole owner of Atex Global Info. He provides information products including "how to" video presentations on specific aspects of investing with "stock chart analysis" as his main concern. John is a certified public accountant by profession with over 25 years' experience in actual stock market participation and common stock analysis. To learn more about how you can analyze any stock, you may visit his website at: http://www.AnalyzeAnyStock.com

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