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Trend Analysis

  • It is based on the observation that market participants tend to act in herds and that trends tend to stay in place for some time.
     
  • In an uptrend, the security's prices goes to higher highs and higher lows.
     
  • A downward trend makes lower lows and lower highs.

Support:

A low price range in which buying activity is sufficient to stop the decline in price.

 

Resistance:

A high price range in which selling is sufficient to stop the rise in price.
 

Change in polarity principle:
 

Once a support level is breached, it becomes a resistance level and once a resistance level is breached, it becomes a support level.

  • Supply-Demand dictate prices
     
  • Driven by rational & irrational behavior
     
  • Prices move in trends that persist for long periods
     
  • Observe the actual shifts in supply / demand in market prices





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