Realistic Trading & Investing

Technical Analysis
With Chart Examples
Understand Core Concepts; Price Action,
Volume,
Support, Resistance, & Trends

By Simon Milgard
Disclaimer
All examples and explanations are strictly for demonstrative purposes only.
They are not recommendations to buy or sell certain securities. Please do the
appropriate research and consult a certified financial professional if necessary
before you trade and invest. Some methods discussed in the book may not be
suitable for everybody depending on individual ability and/or risk tolerance.
Copyright © 2020
 Table Of Contents
Introduction
Defining Technical Analysis
Advantages And Limitations Of Technical Analysis
Price Action
Volume
Swing Points
Identifying Accurate Support And Resistance
Trend lines
Channels
Summary Conclusion And Final Tips
 Introduction
A wide variety of technical analysis techniques exist but regardless of which
one(s) you choose to apply to your trading and investing it is important to
understand the core ideas behind technical analysis, in order to understand
the strengths and limitations of this approach. With the use of detailed
discussion and real chart examples we can better understand how simple yet
effective concepts can be applied towards analyzing a wide range of charts
under various dynamic market conditions.
Whether you are a complete beginner or an experienced trader and investor,
these discussions and case studies will be of use in further developing and
refining essential elements and skills needed to effectively analyze charts.
The solid foundation on; price action, volume, swing points,
support/resistance, trend lines, gained here can be applied to chart patterns,
and more advanced techniques with greater effectiveness.
For more on trading, charting, and the markets visit my website at
www.ascencore.com/

Defining Technical Analysis

Technical analysis sometimes abbreviated as (TA) is a term that is
interchangeable with charting which is another common term often used
when referring to an analytic approach that mainly focuses on price action
developments that will likely influence market prices in the future. This could
be; the stock market, commodity futures, foreign exchange currencies,
cryptocurrencies, and so on.
Methods that fall under the technical analysis approach mainly utilize clear
past price behavior, reference points, and patterns, along with ratios and
sequences. The end result of technical analysis provides for a higher degree
of reliability when planning entry and exit points for trading and investing.
This approach can be applied to all price charts in all markets to some degree,
regardless of the time period or time frame being analyzed. The reason is
because the influences on the path market prices follow is largely determined
by supporting and resisting forces. These forces can be determined with
technical analysis.
Elements from the above definition underly core technical analysis concepts
that make up the key principles which compose advanced analysis
techniques. This is true for techniques that use indicators and those that do
not. After all indicators are derived from ratios and sequences too. Indicators
can be helpful but they are not necessary. Thus the main focus here is
directed towards core elements that can be complimented by indicators if you
choose to use them on your charts.

Advantages & Limitations Of

Technical Analysis
It is always helpful to remember that technical analysis is a means to an end.
It is and will always be just a tool used to achieve the objective of trades and
investments with higher profits and lower losses. It can be likened to other
forms of analysis such as the study of weather and the use of navigation.
Study of the climate is useful to understand longterm atmospheric and
environmental conditions in a certain region or on a global level. Weather
forecasting is helpful for determining shorter term happenings (usually more
accurately starting at 2 weeks or less). However whether it be long term
climatic conditions on a global scale or a local weather forecast for the
upcoming week, analyzing the weather still has issues and is still subject to
contention over various theories, findings, and use of various study
techniques.
A similar situation is true for navigation which like technical analysis, and
the study of weather is very useful. However it too is subject to error and
debate. This is true regardless of the technique or era. From sea and land
navigation of antiquity with rudimentary compasses, mobile maps in the
modern age, or the development of navigating trajectories into outerspace,
navigation has, does, and will always have some issues.
Using the weather and navigation comparisons is somewhat necessary to
hammer home the point for technical analysis. Now lets examine some
details specific to the utility and drawbacks of technical analysis. Thereby
laying a good foundation of understanding for its effective application.

Universal Applicability
Technical analysis is very popular because the concepts can be applied to all
markets and time frames. Thus regardless of what the trade or investment is,
or when it is taking place, some degree of technical analysis can be applied.
As long as there is a price chart that provides adequate data to construct
appropriate context of past market action, current developments, and likely
influences in the future. The key words here are some degree of technical
analysis, because the amount of technical analysis that can be effectively
applied varies depending on how price has developed on the chart. For
example a simple trend line can be drawn quite easily as long as there are at
least two clear sloping swing points to reference. However if the market has
been in a prolonged flat and neutral range, it may not be possible for a trend
line to be plotted with any great reliability. Certain financial markets and
instruments will tend to have distinct characteristics that can result in certain
technical analysis methods being more suitable than others. For instance
volatile biotechnology stocks will behave in sharp contrast to stocks of
companies in the consumer staples sector and major commodities like gold
and oil. So while it is true technical analysis as a broad approach is applicable
across markets, time periods, and time frames, the specific combinations of
technical analysis methods can vary greatly depending on what kind of chart
it is.

Technical Analysis Is Objective

Chart analysis often has a bad reputation as a pseudo science or even worse
as a useless so called “art” that is merely a form of guessing about the way
price will behave. Unfortunately this reputation is well warranted and
deserved to some extent. The main reasons are due to people inappropriately
using techniques from flawed understandings, which often results in faulty
analysis and significant losses when trading and investing. In addition when
techniques are properly applied they can still lead to poor performance due to
less stringent and even borderline loose criteria.
Such mistaken use of technical analysis can be unintentional especially when
traders and investors are not fully aware of how certain concepts work in
certain context due to a lack of knowledge and/or live experience. However
such mistakes can also result from laziness to learn, and admit fault. In other
words wilful ignorance due to an ego.
These unfortunate realities aside, charting is actually quite an objective
process provided that the analysis is based on clear reference points. Clear
reference points mainly refer to the foundational elements such as
unambiguous structures that have formed in the price movement. In more
tangible terms these can be things such as swing points, the positions of
closing prices, or classic chart patterns like the double bottom or descending
triangle. Thus if basic market structures of price like these are objectively
identified, more advanced techniques such as those based on the Fibonacci
ratios, can be used with much higher reliability.
Like with all tools it is not so much that technical analysis is a “bad” or
“good” tool. Rather it is more accurate to say like any tool technical analysis
is “good” when it is appropriately applied based on clear objective criteria. It
is “bad” when mistakes are made resulting in losses, and as mentioned above
these situations are often due to the misuse and misunderstanding of traders
and investors and not necessarily the analysis techniques themselves.
Proper chart analysis is not a 100% guarantee. Instead it offers higher
probability of price moving in your favour. A simple example which will be
seen on many charts later on is a situation where a financial instrument like a
stock is bought around a properly and objectively identified “supporting”
price range, which results in higher probability of price moving up in the
buyer's favour.

Analysis Is Based On Past Price Movement

Like every other pursuit that strives to determine future outcomes, charting
tries to determine the future path of price based on certain principles applied
to past data. In this case it is past price movement on the charts. This is often
levelled as a criticism of technical analysis. One that is actually quite silly
because unless time travel to the future is possible all theorizing about future
outcomes is based on certain principles and theories applied to what is
already known from the past. Going back to the parallels to the study of
weather and navigation, charting is not much different. Trying to determine a
weather forecast or climate models relies on certain theories and techniques
applied to past climactic patterns and current developments in the weather.
Navigation is similar in that plotting a course relies on certain principles such
as referencing landmarks, plotting a bearing, and calculating trajectories of
obstacles that may exist. This process of trying to determine a future outcome
of reaching a desired destination also relies on information from the past. A
successful navigation reaches the destination without colliding into obstacles.
However the planning of a route is only as good as the information available.
Even if navigation is planned objectively some obstacle not known about
ahead of time can cause errors in the future. In terms of technical analysis of
financial instruments this is also true. A lot can be revealed about the future
influences to the path of price however it is impossible to know everything
with exact certainty ahead of time. Even fundamental analysis combined with
technical analysis can not reveal with absolute certainty what will exactly
happen to future market prices. Though analysis does provide a higher degree
of certainty as to what can approximately happen.
Actually from a linguistic standpoint it is quite appropriate technical analysis
is often called “charting.” Not only is it obvious price charts of financial
instruments are being analyzed, but the charting aspect of plotting a future
course is similar to what is done when navigating, whether it be on land,
water, or in the skies and outer space.

Remember Probability
As we shall soon see with plenty of chart examples, charting is essentially
determining the most probable outcomes of price movement based on which
price ranges and time periods are likely to exert the strongest influence. Once
again technical analysis realistically determines probable future price
movement. Expecting charting analysis to be a magic solution to see the
exact future is absurd, but many traders and investors fall into this mindset
which leads to the aforementioned problems and bad reputation of this
analytic approach.
Additionally it is important to note that often times analysis is correct and
commonly the best course of action is to do nothing at all. Staying out of the
market and not buying or selling the majority of the time makes sense
because realistically suitable conditions don’t always exist for traders and
investors. Commonly losses or lessened profits result from impatient traders
and investors jumping in or out of the market even though they have done the
correct analysis telling them that the conditions are not suitable yet for higher
profits and lower loss potential.
 Price Action
Price action forms the core foundation of technical analysis. It provides
context of what has happened to the price of a chart, which in turn allows for
better understanding of current developments of changing market prices.
Thereby allowing for the present and past context to reveal a framework of
the most likely price ranges and time periods that will influence future price
movement on the chart.
It is a very simple concept to begin with, because at the most basic level it
refers to an increase or decrease in price. However what makes it appear
much more complex at this basic level are the wide range of synonyms used
to describe the two basic up and down movements in market prices. From a
linguistic standpoint a lot of the synonyms used for “up” and “down” price
movement do have slight variations in meaning. However in the domain of
technical analysis it is just a case of using lots of different words to
essentially describe the meaning for the two basic words “up” and “down.”
The following diagrams may seem insultingly redundant, but highlight how
the simple concepts of price action can be complicated by lots of jargon and
synonyms.

There are plenty more variations of describing price action however the
following diagrams present the ones among the most frequently used.
When price on a chart is little changed over a certain time span, it can be said
the market is moving sideways on the chart. The up(buyers buying) and
down(sellers selling) forces are essentially equal during such a time. As well
a quick note about nomenclature for trading and investing. It is often said
“bearish” refers to decreasing price because bears attack with their claws
striking down. While “bullish” refers to increasing price because bulls charge
with their horns facing up.
Below are some of the most common synonym terms used to describe drastic
movements in price either up or down. Once again they all describe a rapid
and/or significant change in price using words that have essentially the same
meaning in the domain of charting.
There are no agreed upon angles for “normal, steady, stable” price
movements in up and down trends. It is actually not necessary or productive
to say such and such exact angles are “stable,” “strong,” or “unstable.” Each
chart has it’s own unique “norm” depending on such things as the type of
financial instrument it is and the market conditions. Though generally as you
can see on the last two diagrams it is generally more stable for price to move
at or below a 45 degree angle. This is of course for both up and down trends.
Once price begins moving rapidly and surpassing the 45 degree range it does
not necessarily mean price will definitely reverse or the market is unstable.
Though after the 45 degree range is when such developments can begin to
run the risk of a large reversal if price does not make smaller stabilizing
“pullbacks” or “retracements” which are essentially just technical analysis
terms that mean minor reversals that help to stabilize a trend. Think of
retracements and pullbacks as relieving the pressure in a controlled way
instead of a large burst or explosion which occurs when the “selling pressure”
in the case of a down trend, and “buying pressure” in the case of an up trend
accumulate to an explosive and unsustainable level. Eventually leading to the
end of the established trend in the form of a large reversal or break out of the
established trend.
“Healthy” or “stable” trends are not determined by the steepness of angles
but how long the increase of the angle lasts for. Markets are never completely
linear and will steepen and flatten out periodically according to market
conditions. Be aware of the general steepness of tends but don’t get caught up
in trying to measure the exact angle of every decline or incline on a chart.
Think of the 45 degree range as a rule of thumb and not a hard set rule since
other factors forming the context of price movement also influence what is
considered “normal stable” price movement at any particular time span and
price range on a chart.
Also when price action is sideways or at a very shallow and low angle well
below 45 degrees such as seen in the next diagram. It is often a sign the
market is “resting” in the build up to a large move to break out of the
sideways range or shallow angle. Just like the extreme of a sharp angle well
above 45 degrees a low or flat period of price movement can also eventually
result in a large price shift either in the form of a reversal or continuation of a
longer term established trend. The longer price remains at one extreme on the
chart the more likely it is to make a significant shift. This is true for
prolonged sharp up and down trends, as well as prolonged sideways or low
angle ranges that extend for a long period of time.
Lastly there is the unstable or volatile category of price action which is
sometimes colloquially called whip sawing price action, likely this term
originated because the rapid shifts in price resemble a whipping motion and
the teeth of a saw. The main characteristics are large and rapid changes in
price. Volatility can occur in a downtrend, side ways or shallow angled range,
and in up trends. However usually this category of price action is most
commonly associated with very uncertain and/or bearish markets that are
sideways to bearish in their movements.
 Volume
In addition to price action the other primary foundation of technical analysis
is volume. It too is a relatively straightforward concept to begin with, but it is
often not understood to the fullest extent. The lack of understanding can
largely be attributed to the slightly more abstract nature of volume in
comparison to the basic directional premise of price action. Though fear not
because there will be a series of unique diagrams that will enrich your
understanding of volume. So whether you are a complete beginner or an
experienced trader and investor you will further advance your knowledge of
volume.
Then before beginning with the diagrams it is helpful to note that it has been
traditionally easier to analyze volume in markets that can reliably and
accurately publish the volume. This means that the stock market and
cryptocurrency markets are most suitable. Forex, Commodity futures, bonds,
and other markets aren’t as reliable in terms of the seamless reporting of
trading volume made available to the public. In fact in most cases markets
like these won’t display volume at all on most all charting platforms. Stocks
and cryptocurrencies can be easily and readily tracked in terms of the number
of shares bought and sold in the stock market and the quantity of any
particular cryptocurrency traded. Other markets are naturally more difficult to
track in terms of the volume. For example the Forex market will have
difficulty keeping track of currencies being exchanged all over the world,
especially when trying to seamlessly report cash exchanges, and exchange of
currencies in less connected and transparent parts of the world.
The stock market by contrast has set hours and is open for defined
geographical regions and every share bought and sold is easily and
seamlessly tracked. It is similar for cryptocurrencies even though this market
is less fixed in terms of its operating hours and no set geographical region.
The inherent digital ledger of technologies around block chain make it just as
easy if not more seamless to update trading volumes.
With this in mind it is not to say stocks and cryptocurrencies are superior for
analysis. As we shall see in examples in other markets that don’t display
trading volume, charts can still be analyzed to great effect with price action
alone.
Overall volume can be described as the following...

What a simple concept, right?

When a particular trading session, let’s say one day on a daily chart results in
an increase in price it is common to see the volume bar displayed as green by
default on most all platforms. For example like shown above it could be a
stock that increased in price today and the volume of shares traded was 5
million. Likewise it could be another chart that had price fall and a total of 2
million shares traded, or it could be a chart that increased in price and had 1.8
million shares traded.
Now to advance this idea further lets visualize volume and the markets. The
following graphical representations of these will allow for an intuitive
explanation that makes it easy to quickly and visually understand the context
of volume in a diverse range of charting contexts. All without the need to
necessarily use indicators. A lot of indicators exist with the intent to enhance
or make it easier to gather the context of volume and price action. Though the
truth is they are complimentary and not required. It is very possible to have
excellent analysis and
results trading and investing without ever using an indicator of any kind.
At first glance one might think the first diagram here is a drawing of the sun.
That would be a correct observation. This will give a good visual conception
and analogy to enrich your understanding of volume. The sun as you may
already know is just one of many stars in the universe. For our purposes it is
like one asset in the universe which can be considered all financial markets.
The sun here will be analogous to one stock in our galaxy, our galaxy is the
stock market. Other galaxies can be thought of as other markets.
Next as you may also already know the sun is full of energy and sometimes
this energy can be concentrated in the form of sunspots. Don’t worry this
isn’t going to turn into an astronomy lesson it is just a very useful analogy.
Now each sunspot represents the total number of shares for a stock. The
diagram has 13 spots. For conversations sake each spot will represent 1
million shares of our hypothetical stock. In total that means there are 13
million shares of this stock that exist. Furthermore the circle in the middle
represents shares that are “outstanding,” in other words they are shares that
are not owned by the company that issued the stock but instead shares that
are out and traded in the market. The spots in the triangles represent the
shares that the company still owns and/or positions that are held by traders
and investors. In other words those 8 million shares in the triangles are a
combination of shares still held by the company that issued the stock, or they
are shares bought and still held by traders and investors in the market.
In the cryptocurrency market this would be similar to the circle representing
the currency that has been mined and the triangles representing the currency
that has yet to be mined and/or currency that is held by traders and investors.
The same kind of idea of this diagram can be applied to other markets like
Forex and Commodity Futures. The circle is what is out in the market, it
represents buying and selling offers ready to be exchanged among market
participants (traders and investors). While the triangles are the quantity of
those securities that are not currently offered to be bought and sold.
Just like the energy in the sun the shares of a stock or any security for that
matter are constantly moving. Shares of the stock are constantly being bought
and sold and that is why the price moves. You probably already know this
too. Though what is more difficult for most to grasp is how volume relates to
the magnitude of price movement. It is quite easy to understand that a large
amount of selling could drive down the price significantly if far more shares
were sold than bought at a given time. This would normally be very apparent
by the display of a massive tall red volume bar.
However what is more difficult and sometimes frustratingly puzzling to try
and understand is why the market price on a chart can move significantly
even when the volume appears to be low.
Moving along in the next diagram below we see 1 million shares being
bought(hence the green dot) and zero shares being sold. Obviously such a
scenario would virtually never occur but this is just to understand volume
more deeply. Thus here there is a surplus of buying in the market for this
stock. 1 million more shares being bought than sold is significant enough to
move price higher. Of course like the rule of thumb of 45 degrees discussed
earlier for the increases and decreases in price, there is no set quantity or ratio
of how much more buying/selling volume is present before resulting in a
given quantity in terms of the change in price. Though naturally price
increases when there is a drastic imbalance of buyers compared to sellers like
in this scenario. The same holds true for the reverse a significant quantity of
selling relative to buying will result in price decreasing. Each chart will be
different depending on the type of chart, the market, and market conditions.
Though another rule of thumb to keep in mind is that the more “liquid” a
stock is the higher imbalance of buyers to sellers will be needed to move
price up significantly. A chart with high volume is said to be liquid while a
chart with low volume is not. It makes sense because in order to move the
price of a highly liquid stock of a large company, it would require
exceedingly high volume in comparison to the relatively lower proportion
needed to move the price for a stock of a small company.
Though the trade off is that a small stock with less volume would have a
much wider bid ask spread since there are less buyers and sellers available to
agree on trading prices. In contrast highly liquid stocks will have a thin bid
ask spread as there are plenty of buyers to offer more variety in buying and
selling prices.
The higher the imbalance between buyers and sellers the more drastic the
price move. In this case now there are 2 million shares bought increasing the
steepness of the rise in price.
Further still a very extreme case below with an even higher imbalance of
buyers to sellers. Resulting in a near vertical climb. Such a scenario can for
instance occur when the market responds positively to a company’s earnings
report.
Now with the addition of 1 million shares of selling the imbalance or
disparity of more buying than selling is still present. Except now the upward
rise in price is lower, because the disparity is back to 2 million more shares
bought than sold. Also only 1 million shares are available to be traded in the
market now. 8 million shares are still held in position by traders and investors
or are shares still held by the stock’s company. In any case 8 million shares
still have the potential of being traded later.
Next 3 million more shares enter the market. It doesn’t really matter if they
were shares held by the company and/or ones bought by traders and
investors. The end result is that there are 3 million more shares entering the
market.
Now a million shares is sold and overall it results in a net decrease in the
stock price which is still up for this particular trading session.
However now the upward incline is far lower and that is reflected as the angle
of price increasing is back to what it was when only 1 million more shares
were bought than sold. This demand for 3 million shares on the buy side
compared to the 2 million shares selling on the sell side is still a significant
amount but the proportion is not as much as it was earlier.
Eventually price is virtually unchanged and remains quite flat as 3 million
shares are now on both the buy and sell side. Obviously in real live markets
this would almost never happen but for the sake of demonstration figures on
the buy and sell side are equal. In reality the quantity of buying and selling
would still be close but not perfectly equal in situations whe trading sessions
result in little to no change in price.
Now is the beginning of a conceptualization of what happens when the
market reverses(in this case to the downside), as more selling is introduced
into the market.
A decline begins
Then buyers that bought earlier in the session begin to sell. The scales tip
even more to the downside as yet more selling pressure is introduced into the
market.
Here is the polar opposite of what was seen earlier as the above diagram
demonstrates the
re balancing of the market during a steep shift into a rapid decline.
Finally the above diagram represents the balance returning to an increase in
price due to a shift back to more buying than selling in the market during the
trading session. Such rapid shifts as seen in the last 2 diagrams are more
common during periods of uncertainty and decline, such as during recessions.
However such characteristics can also be seen in volatile charts such as new
biotech stocks, or highly speculative periods for currencies and commodities.
Just like the many synonyms used to describe the simple ideas of up, down,
and sideways movement for the core components of price action, volume also
has its fare share of analogous terminology. Volume can be thought of, and it
is indeed often referred to as the; energy, force, pressure, interest, intent,
potential, and consensus in the market. It is what determines the magnitude of
price action to a large degree. In later chart examples we shall see many
instance of how certain formations of volume coincide with certain events in
price action.

Drivers Of Volume
Before getting into some chart examples let’s first discuss some of the drivers
of volume. Asking what drives volume? Is essentially asking why the market
has certain quantities of buying and selling at any given time? There are
many reasons why there might be more interest to buy than sell or visa versa,
as well as a myriad of reasons for the market to be relatively neutral and
balanced with near equal buying and selling pressure. Moreover there can
also be periods of low and high volume.
The “market” is a collective of market participants. For this general
discussion It doesn’t matter who the market participants are whether they be
short term traders or long term investors. It makes little difference for our
initial understanding of this concept if the market participants are individual
people with low capital, large institutions with lots of capital, or even whether
they be computers trading based on algorithmic models. The point here is that
there can be plenty of diversity in terms of market participants who will
ultimately effect price action and volume when they buy and sell. Moreover
each market participant has their own unique set of reasons they may choose
to buy and sell, or do nothing at all at any point in time. Thus regardless of
how much influence they can exert on price action and volume each market
participant adds even more diverse and variable influence with their own
unique circumstances and reasoning for how and when they may choose to
participate in the market.
With the above information in mind it is then important to remember that the
market is a mass of market participants, in other words a crowd. Thus like
any other crowd there will be many reasons as to why they act the way they
do. However most often there will be a few main reasons that drive the
majority of the crowd’s behavior. In our discussion that means although there
can be high diversity in terms of market participants and even more
variability in the reasons behind their actions, at the end of the day there will
be a few key influences dominating the reasoning for the bulk of the crowd.

Common Drivers Of Volume

Later on there will be more discussion on the drivers of volume from a
technical analysis standpoint, but it is helpful to first list some common
drivers. These are mostly fundamental however they are common because
these are often recurring events or obvious major influences that will trigger
lots of future buying or selling.
For the stock market these are most often quarterly earnings reports, and
major announcements specific to a company such as change in strategy,
leadership, or a scheduled product launch. These are of course fundamental
events that drive the technicals when charting. Even if traders and investors
use little to no fundamental analysis it is still highly beneficial to take note of
such scheduled events which are already known to have a significant impact
on stock price.
In addition the stock markets and all other markets for that matter also look at
fundamental forces such as expected future growth, geopolitical events, and
economic reports such as those for employment and interest rates. Resource
production, refinement, and inventories are also a common consideration for
driving buying and selling decisions, which in turn impacts volume seen on a
chart. This holds true even if traders and investors don’t directly have
holdings in commodities such as energy or resources like metals. This is
because the commodity market is a good example of the complex interaction
across different markets. In this case supplies of energy such as oil and
resources like metal can still impact on a global scale and thus impact the
volume and price action in the stock markets and forex markets.

Low Of Volume
It is also useful to understand some common influences related to periods of
low volume. This can be quite important for identifying time spans when the
market sill be relatively flat in price action and have low trading activity.
Holidays are well known for being periods of low trading activity since
market participants like most everyone else are taking a break. Half days and
the days before a holidays often see low volume before the actual holiday
itself.
Anticipation before major events such as the ones listed above as the drivers
of increasing volume can also see periods of low volume. For example in the
stock market it is quite common to see low trading activity just before a
quarterly report. Likewise after a major event has occurred such as the ones
listed above, there may be a lull in trading activity as the market digests what
has happened. Periods of low volume are often the result of uncertainty
following a major market move.
Miscellaneous Drivers Of Volume
Next there are reasons for market participants to buy and sell regardless of
whether major events reduce or increase volume. These influences explain
why there will still be buying occurring in the market even when the vast
majority are selling and visa versa selling taking place even when prices are
soaring. Along with why even during periods of low volume there are still
buyers and sellers.
One reason could be market participants trying to scale in and out of
positions. This means market participants already hold a position and they
now want to reduce or increase that position. A straightforward example is
buying 100 shares of a stock and scaling up by buying more shares in the
hopes of capturing more profits, or scaling down by selling shares to reduce
exposure to the market and thus risk potential.
There is also dollar cost averaging where investors periodically add more
capital to buy more of an investment. In other words an investor will buy an
asset at planned intervals. For example an investor buys a certain quantity of
stock shares every month. Thus there is buying in the market that is not
directly related to the types of catalyst events that are the main drivers of
volume.
Selling volume can also occur due to traders and investors trying to cash out
of their positions in the market. The reasons for doing so are highly
individualized, for example one might sell because they reach a satisfactory
level of profit. Others may sell to cut losses. While others may choose to sell
regardless of whether they are at a loss or profit, because the capital from the
sale is needed for something else. For example an investor may choose to
liquidate(sell off) a large portion of their holding in order to use the cash to
make a big purchase such as buying a house, paying off debt, or buying other
assets that appear to be more promising.

Drivers Of Volume From A Charting Standpoint

Although the miscellaneous drivers of volume discussed above are broad
categories driven by a multitude of factors that can be highly individualized,
the end result of increased or decrease volume is quite simple.
Technical analysis essentially allows for a visualized representation of the
overall market intent. In other words charts can reveal what the dominant
intent of market participants is, it can be buy, sell, or do nothing at all by
holding current positions in the market or not entering the market yet. Every
market participant has their own unique set of considerations behind their
reasoning, However at the end of the day market participants will either buy,
sell, or do nothing. Just like any crowd the “market” (a crowd of market
participants) is often influenced by a few key dominant factors, which drives
the majority of their actions.
In more concrete terms taking profits and cutting losses can be understood by
technical analysis in the form of key swing points, price ranges, and time
frames. Key price ranges more commonly known as support and resistance
are easy ways of determining where the main concentration of interest is for
the majority of market participants. For example price dropping down to the
range of a previous all time high can trigger support for price to rebound up
as the main interest in the market majority could be to hold the asset at the
previous all time high price, thus increasing the buying volume and
decreasing the selling volume due to a lack of willingness to sell below the
price of the previous all time high.
Up trends and down trends can be driven by a multitude of factors but from a
technical analysis standpoint a chart can reveal a trajectory for the incline and
decline of market prices in the form of momentum and continuation. For
example the underlying reasoning for the price of a gold mining company's
stock rising could mainly be driven by a multitude of factors such as the
rising price of gold and good progress in exploration of a new gold mine
location. On the chart the reason for the increase in volume and price isn’t as
important as analyzing the trajectory of the rise.
 Swing Points
Finally after all the hypothetical, theoretical, and conceptual discussion the
primary technical analysis principles can materialize with real chart
examples. The first series of charts will demonstrate the concept of swing
points and provide for a transition into later topics. The name of this asset for
this chart, the time period, and time frame will be revealed later. The main
point of the following is to demonstrate swing points on real charts. As
discussed before the basics of technical analysis can be applied to all markets
and time frames, so this could be anything representing the key ideas behind
swing points.
Swing points are simply areas where price reverses on the chart in this case
there are 2 downswings around 55.

Swing points naturally form around areas of support and resistance. These are
contentious areas where buyers and sellers are concentrated. Here the swing
points around 55 offer potential support as the market falls back towards 55
after a strong surge up recently. Selling pressure increased after green buying
volume began to lessen before price failed to pass 57.
That being said at this current time the market has temporarily paused the
decline as price goes sideways and red selling volume has subsided in the
past few sessions. This is quite natural because the buyers that bought around
the time of the two downswings highlighted in red circles, are the
predominant force keeping the market up now. There is more interest for
them to hold at 55 or buy more of this asset. While at the same time there is
less incentive to sell and loose as price dips but doesn’t decisively slip below
the mid 50s yet.

Selling is still present but it is low. The majority of the market in the short
term is content to hold the asset around 55 and even buy more towards the
upper 50s. Thus any selling is practically negligible at this point. Before the
current red spike right now there was a relative increase in volume in the
preceding 4 sessions. The market is bullish in the short term but in the bigger
picture remember the market reached a new high at 57 and a few red selling
volume spikes have easily driven price down recently.
At the bottom left corner it reads volume (20) which simply means the bluish
purple colour over the red and green volume bars represents the average
volume over the past 20 sessions. This is not necessary but is useful in
visualizing relative increases and decreases in volume in the shorter to
medium term context for the demonstrations.

The market is now very volatile as the steady rise reverses with renewed red
spikes.
The buyers are still holding strong around the 55 area even with the renewed
increase in selling pressure. As once again there is a dip below 55 followed
by sideways indecisive action. Thus here we see the influence of the initial
two downswings highlighted in the red circles. That initial area of selling
around 55 is now acting as a support as price falls onto it again.
However keep in mind the supporting potential around 55 is not guaranteed.
In the bigger picture selling pressure is greater and increasing following the
reversal down from 57. The contingent of traders and investors in the market
that is holding on to this asset at the 55 area, mainly from the initial two
downswings and then the recent up swing up off 55, is beginning to weaken.
There is increasing incentive to sell and avoid losses as the market is under
pressure and few buyers are stepping into the 55 area again.
Here we also see the importance of swing points as an area or price range and
not an exact level. 55.17 and 57.00 are simply nice visual representations of
where the market concentrates buying and selling. In reality the market will
never truly have a pin point price down to the decimal that can be reliably
called the exact swing point to form support and resistance. It is more
realistically the price where buyers and sellers are most concentrated slightly
above, or below that level, and not always exactly on it. In other words it is
best to utilize a price range that centers around an important price level.
Rather than using a single price level.

Upon the decisive break below 55(marked by the yellow circle), it is now
very clear the slight support in the form of sideways price action was only a
temporary phase. Constant selling pressure continues to drive down towards
52.00(the site of a major swing point, in this case an up swing in the recent
past).
52.00 offers potential support but we must keep in mind the downtrend that is
still developing in the longer term perspective.
The downtrend intensifies rapidly and easily drops below 52. Here it is a
repeat of what happened at 55 except to a stronger degree. Price stalled for a
very brief period before moving even lower with continued pressure brought
about by the constant selling from the mid to low 50s.
After a while the market begins to recover as there is a shift to almost no
more selling volume around the 49 level.

Incidentally 49 was also the site of the last major upward reversal that put an
end to the last major down trend further back. Thus it is quite natural for the
current upswing to form strongly around 49. Additionally 52 now offers
some resistance on the way back up, even though there is proportionally farm
more green buying volume. It is by no means intense but there is constant
green buying volume easily visible. So after some flat price action centring
around 52 the resistance is overcome as green volume gradually and steadily
increases along with a surge up in the price action.

Later on the market recovers back up to 57 where it begins to face some

resistance and stalls once again, similar to what happened at 52 and 55
earlier back on the way up.
Now we can see it was a daily chart of the SPDR Select Sector Consumer
Staples ETF from late 2017 to early 2019. Though once again it doesn’t
really matter what the chart was. You could see the general characteristics of
swing points in any other chart. Note the key characteristics now that we
have seen as both small and large up trends and down trends have formed.
Often swing points especially recent ones will have great influence in
forming upcoming support and resistance areas. Furthermore support can
become resistance and visa versa. As we saw with the 52 and 55 areas that
formed down swings and later up swings, followed by their acting as
resistance on the way back up from 49.
Observe that there are often major shifts in volume with large increases and
decreases of volume as price moves near the support and resistance formed
by clear swing points. As well it is apparent major boundaries like 49 which
reversed larger trends are more significant when compared to more minor
swing areas such as 55, which still had influence but far less in terms of the
magnitude as seen by the reversals around the mid 50s.
Also keep in mind that even though an area can offer great potential support
or resistance, it will not necessarily be a guaranteed reversal area. The drop
through 55 and especially 52 are great examples. The initial upswing at 52
with high green volume did seem like a very promising bounce opportunity.
However the market continued to plummet due to the longer term context
that was discussed. That being said you can still see very brief support at the
2nd yellow area. Conversely on the way back up from 49 after the rapid shift
in volume from strong selling to steady buying, it was apparent 52 and 57 did
offer resistance but it was to be minor to moderate with no major
downswings since the steady green buying volume developed up through the
low 50s. Then it is also quite natural there were no major green spikes on the
way back up to 57 because the buying volume was moderate to low but
constant. As opposed to the strong red spikes that even crashed through the
promising 52 level.
 Identifying Accurate Support And
Resistance
Support is essentially a price range that falling price will likely reverse back
up from in the form of an upswing. Support can also have flat price action
during a delay before an eventual upswing. If it does not hold and price
continues lower it will likely do so after a period of sideways price action.
Price only goes straight through a support with little to no sideways price
action under strong down trend conditions similar to what was seen as price
fell through the 52 and 55 levels in the case study from the previous section
about swing points.
Resistance can then be defined the same way except in the reverse, where it
offers resistance to rising price. It is likely to produce a down swing.
However like support it may also stall price with flat sideways price action,
there after the market will either form the downward reversal or continue
higher. If the resistance does not hold price back down it will likely be during
a strong uptrend where there is little to no resistance in the face of high
buying volume and strong upward surges in price.
When identifying accurate support and resistance the most basic, common,
and reliable way is to run a line or several lines to form a price range through
several swing points. Preferably these will be at least two swing points that
are fairly recent and have reversed major trends. While this method is fairly
simple it is highly effective and can be applied to all charts. The only great
difficulty is trying to run your line(s) to identify the area where the most
attention is concentrated in terms of where the majority of market participants
would buy and sell at. As mentioned earlier it is near impossible in reality to
get the exact pin point price where a reversal will exactly occur. However it
is best to narrow down the price range to center around a price level. Instead
of drawing wide price ranges that won’t be very useful in determining solid
and reliable support and resistance.
The following 5 cases demonstrate chart examples with the preferred
characteristics of more reliable support and resistance identification. See if
you can identify some commonalities on these diverse charts before the
discussion that follows. It will outline the simple yet effective skill of
identifying effective support and resistance without the need for any fancy
tools.
We shall see examples from all kinds of markets and situations. In this first
case the gold futures chart demonstrates the possibility to do effective
analysis without necessarily using volume.
Simple and straightforward yet the identification of 1697 as a key resistance
and later support range was extremely beneficial.
The yellow and blue regions give some details and hints of the core
characteristics to look out for when plotting support and resistance.
Now here is a change as we look at the stock of Zoom Video Conferencing.
Obviously this individual stock is different than gold futures and the next
case study but the point here is to see what all these cases have in common.
Different market but similar story in terms of the price action, and since this
is the stock market you can also note some features of volume that
accompany the price action.
Different market yet similar characteristics, and once again some more hints
of the key characteristics to look out for.
This case of the Australian Dollar to Japanese Yen has no volume to
reference like the gold futures chart. So focus on the price action which is
more than adequate.
A reminder of what we discussed before in terms of looking for approximate
price ranges of interest rather than looking for the exact price targets down to
the decimal where reversals, continuations, and breakouts will take place.
The famous case of Bitcoin provides a great example here during the time it
really came to the forefront of mainstream public attention in later 2017. As
well we can see yet another market that is quite different than the stock,
forex, or commodity futures markets.
Even after such a long time and such drastic fluctuations in price, a few key
areas identified at the start serve us well in identifying areas of interest and
contention for the market participants involved with Bitcoin.
Let’s change things up once again with an intraday chart in the 15 minute
time frame of the SPY ETF which tracks the S&P 500 stock market index.
The chart will behave in sharp contrast to most of the cases we’ve seen thus
far due to the shorter time frame. However you can still notice the important
characteristics seen on the other charts.
Here it is not necessary to fully understand “price gaps” (marked by the blue
rectangles. Just know they are more common on intraday charts, especially
the stock market where more volume and drastic price action is concentrated
at the open and close of the market from day to day.
If you are interested in a comprehensive look at price gaps, the book
Realistic Stock Chart Analysis: Price Gaps Explained Using Real Chart
Examples
is a good resource.
Note the volume and price action pointed out above in a context where there
are no significant volume spikes when price breaks above the 322.70
resistance.
Finally when we look at the big picture with the daily time frame, you can
clearly see those support and resistance levels are also in line with some
major long term levels in the recent past and further back in time.
After seeing all those charts you probably noticed some overarching themes
and common threads in terms of the characteristics involved in the simple yet
effective process of identifying support and resistance. Now in case you
missed some or need further detail, here is an outline of those characteristics.
Line up with at least one past swing point, though preferably to
line up with at least two swing points and ones that are more
recent. However it is still alright to use one single swing point
and/or swing points that aren’t as recent, especially if they are the
only points available such as at an all time high or low price range.
The only thing is they will generally have less influence as
upcoming support and resistance when compared to using at least
two recent swing points.

When multiple swing points are in close proximity to each other

choose the one or two that have made the largest reversal in price.
Often when there are too many swing points to choose from you
will have to choose between recent swing points and those that
have produced the largest price reversals(which may not be
recent), and swing points that are “sharper” meaning they reversed
price quickly without any sideways action and usually with an
increase in volume.

If it is difficult to plot one single price level that runs cleanly

through several swing points it is useful to draw a price range such
as was seen with the bit coin example. All swing points are
covered in the range. Though be careful in not making the range
too wide other wise it won’t be as precise and useful.

Whenever possible round the price levels and ranges to round

numbers ending in 0 or 5. These are psychological marks for the
market since they are easier to spot and they leave the chart less
cluttered. Much more desirable than a multitude of uneven
decimals on the chart.

When support and resistance are passed it will usually be done so

with an increase in volume and a large spike in price action in the
form of a big green or red candle depending on whether price is
falling or rising. If no volume is available, no problem as seen with
the gold futures, and AUD/JPY charts. Just look for the large spike
in price above/below the support/resistance area.

Having price temporarily pass support and resistance is alright.

They are only areas where price has a higher chance of reversing
or at least stalling sideways, due to the higher concentration of
interest at these areas in terms of ranges where buyers and sellers
look to trade and invest at. They are not guarantied prices where
price will certainly reverse. The example of Zoom Video
Conferencing stock was a good example. When Zoom stock
recovered back up towards 160 it eventually contacted 160 directly
with high volume. As the swing point formed there was high
volatility and contention between buyers and sellers. Eventually
the selling pressure was overwhelming enough to form a down
swing with ease. Both price action in the candles and the high red
volume bars were evidence of this during the heavy resistance
upon first contact with 160. So while it is not necessary to
understand candle charting and patterns it is important to note that
price like in the Zoom stock case, can have a swing point’s price
action penetrate above a resistance and below a support.
Particularly if there is strong contention like what was seen with
Zoom at 160. So if you use candle charts to see price action like in
these charts, highly contentious areas will often see price
temporarily penetrate past support and resistance, even if a reversal
will eventually form.

Price will usually not break out past support/resistance like for
Zoom when it returned back to 160 for the first time, when there
are more closing prices below the resistance. In the case of support
it is the opposite where price drops below supporting prices but
closes above them. This is applicable to all charts whether it be the
closing prices for a 15 minute, 5 minute, or a weekly chart.
However like in most of the examples above this is especially
effective on the daily time frame where each candle/session is one
day. In the case support/resistance does not hold the price action
will often streak right past these barriers. The price action will be
quick often in the form of one or a few long candles such as was
seen with the decline of Bitcoin price going through all those
supporting levels and breaking lower and lower.

The last example using the SPY ETF of the S&P 500 index
provides a good illustration of resistance and support levels having
even higher accuracy and validity when they are applicable across
multiple time frames. In that case it was intraday support and
resistance on the 15 minute time frame that had high relevance
even when applied to the larger daily time frame, where many of
the same levels aligned with accurate support and resistance areas
on the daily chart.

The SPY chart in the last example also provides a clear illustration
of support and resistance acting to stall price sideways before a
break further to continue the current trend, or begin a reversal.
These instances are highlighted in the orange regions for price
stalling sideways before reversing at the yellow areas, or breaking
past support/resistance often with a price gap. In some cases price
begins stalling before even contacting the marked price levels,
almost like a repelling magnet as seen by the sideways price
stalling just under 322 before a downward reversal point form
directly on 322 from July 11th-15th. Minor stalling can still be
seen even during a strong drop such as when the SPY chart
continued dropping below the 317-316 range but still slowed down
marginally before resuming lower around July 14th.

Support and resistance can also be passed with relatively constant

price action and volume. The SPY ETF of the S&P 500 index
provides a clear example. When the 322 level was surpassed on
July 20th without significantly large spike in price action or
volume. Instead there was constant volume that was near normal
levels before and after the brief sideways action marked by the
orange rectangle. Such occurrences reflect a desire to to drive price
up while at the same time there is still hesitation and indecision in
the market, but eventually uncertainty settles down and price
resumes the previous market intent to drive higher. Thus it is still a
 continuation breaking above 322 but instead of a fast and large
break out with large green volume bars and price action, it is a
slower and more steady rise. The same thing can be seen on the
Zoom stock chart when it returns back up to 160 and passes it
successfully for much higher prices. At first volume is relatively
low but constant before and after the sideways range around 160.
Then the market builds up and surges far above 160 to illustrate a
case of a slow but steady start before rocketing up.

Once again if there is no volume such as on the gold futures or

AUD/JPY charts there will often be consistent rows of green when
breaking above resistance at a less rapid pace, and consistent rows
of red candles/sessions when the market declines at a more
moderate pace instead of sudden and large sell offs continuing to
spike price lower and lower.

There are other basic yet effective ways of identifying

support/resistance such as looking for price gaps, and referencing
the IPO price if applicable. However the main focus in the majority
of cases will utilize the characteristics discussed above. Then there
are more advanced and complicated methods such as using
Fibonacci ratios and indicators but those are beyond the scope of
the foundational methods discussed here. Moreover methods such
as Fibonacci and the use of indicators are best understood and
utilized to full effect only after the basics of plotting
support/resistance, and trend lines are mastered.

Let’s go through a few more examples step by step to see how support and
resistance develop in greater detail. Most of these concepts of drawing
horizontal price levels and ranges will transfer over to drawing trend lines
and channels which are slightly more difficult to master as they are angled
and not horizontal.
This case of Spotify stock will be useful in understanding a situation where a
new asset has been listed on the market. Spotify Technologies listed on the
New York Stock Exchange in mid 2018 as shown above. Let’s see how price
from the first day impact support and resistance far into the future, along with
the normal ways of finding support/resistance through swing points.
196.30 provides a helpful identification of upmost resistance thus far, and it
encompasses many of the key resistance features we discussed earlier.
Namely it runs through 3 major downswings that produced a large decline in
price. Next pay attention to 165.90 which is the opening price on the first day
Spotify began trading on the markets. This price is also called the IPO(Initial
Public Offering) price. Then there is 149.01 which is the closing price for
Spotify from its first day of trading on the markets. Similar to price gaps the
prices from an asset’s first day of trading have high influence on future
support/resistance formation It is also one of the few basic yet effective ways
of identifying support/resistance without necessarily lining up price levels
and ranges with past swing points. This will mainly apply to the stock market
because it is much more common for new stocks to be listed on the market
than currencies, commodities, or other assets.
Right from the start 165.90 and 149.01 support and resist price. This is very
natural during the early life of a chart like this. Furthermore it is quite
apparent lots of interest is naturally concentrated around the IPO price as
evidenced by the disproportionately high volume at that price range.
Over a year later and 149.01 still exerts great influence on Spotify’s price
action. Here you will notice a secondary characteristic that is not necessary
but adds to the validity and strength of good support/resistance. That is “role
reversal” 149.01 initially supported falling price with many reliable up
swings, and now it produces resistance and already formed a strong
downtrend with another one likely in development right now.
Price continues to remain under pressure at 149.01 as buyers are unable to
clear it decisively. At tht same time lower support can be drawn around the
120.50 and 105 levels that produced major reversals recently.
After prolonged but natural contention at such a major level like 149.01,
Spotify declines sharply onto 120 which also happens to be a gap fill for the
recent price gap up that formed in late October. Once again knowing about
price gaps is not entirely necessary for our purposes here but it is further
validation of the 120.50 area as strong support. Even if there was no price
gap though, there were already two major upswings with high volume, that
formed quick and sharp reversals back up.
If you are interested in fully understanding price gaps the book Realistic
Stock Chart Analysis: Price Gaps Explained Using Real Chart Examples is an
excellent resource. Price gaps are a more common occurrence in the stock
market because of regular sessions with defined hours when the market is
opened and closed, along with regular scheduled catalysts that drive
volume(mainly quarterly reports).
Although the 120.50 area offers considerable support potential it still has
price penetrate below it before the rapid incline back up. This is due to the
strong and volatile downtrend that preceded, as evidenced by the volatile
price action and increased volume at that price range during the March 2020
to April 2020 time span.

Understanding candle charting is not entirely necessary for the discussion

here but it can be a useful compliment to further enhance the identification of
suitable swing points and thus support/resistance. In this case the upswing off
120.50 from March to April was not forming a break lower because price
often penetrated below the 120s but managed to close at or back above it.
Additionally just by looking at the color alone you can see the big red spikes
are more short lived and have little progress in dropping below 120. While
the green volume and price action is lower compared to the one big red spike,
it is more consistent and easily reverses the downward progress of the few
red spikes.
In the short term to medium term from March to April the initial volatility
dropping onto 120.50 produces some sideways price action into early April.
This is also accompanied by low volume, but overall just by the color alone
the market remains more green. A sign the market is more neutral to bullish.
Whatever the exact reasoning for the actions of the traders and investors of
Spotify at this time, the end result was an initial attempt at an upswing to
reverse the strong drop in mid to late March. Some indecision followed as
reflected by the flat period into early April. Uncertainty still lingered but
eventually the market resumed the bullish intent to rise, while at the same
time interest to sell diminished drastically as evidenced by the simple yet
effective observation of less red than green price action and volume.
Although 165.90 and 149.01 are still highly influential as resistance
approaching mid 2020, the increasing interest to buy is very apparent.
Particularly as there was a strong reversal from 120.50 followed by a gap up
and relatively rapid rise over 140.91. Such price action and high volume is
normal to pass even strong resistance/support areas. Later on the 196.30 level
remains strong as well. In fact it was looking like it would produce a triple
top reversal soon, until the strong surge well into the 200s came about just
before July started. Once again an excellent demonstration of a strong barrier
being passed by strong spikes in price action and volume, in this case spikes
in green buying price action and volume.
Then if the chart was to be refined more it would have actually been better to
draw resistance centred closer to the 195.00 level. Since Spotify initially
contacted this area with closer proximity. Also here it is acceptable to have
some slight penetration of price back in 2018 going above 195 temporarily
because of the strong increases in volume at those downswing points.
Additionally when using the line chart with each dot representing the closing
price it is quite clear 195 is strong resistance. As price temporarily went
above it but often closed back below it despite the presence of increased
green buying volume. Thus it is not much a surprise later in 2020 when the
strong uptrend approaching the 200s is heavily resisted by the 195 area. This
again also demonstrates support/resistance is more practically thought of as a
zone or price range centring around a price level and not an exact price level
down to the decimal. At the same time this case of 195 being better than
196.30 demonstrates that in reality there is some room for error and no need
to be perfectly precise down to the decimal in real world scenarios like this.
This forex chart of the British Pound to US Dollar provides a case of analysis
without using volume. Right from the start here it is helpful to note the macro
features, in other words the big picture. After peaking in early 2018 a
sustained downtrend formed. By the start of 2019 price action was already
going more range bound as the market didn’t form a newer low under 1.2480.
In the more medium term context there was a recovery back up to the 1.3000s
range where resistance formed another downtrend, and after some initial
indecision and stalling just under 1.3180 a clear path looks set to open,
leading to a likely return to the mid 1.2000s range. With that context in mind
there are several key price ranges and levels marked out using the key
characteristics of good support/resistance discussed earlier.
Indeed the market swiftly returns back to the mid 1.2000s. This highly
influential lower range is under pressure once again following a neutral to
slightly declined range that formed from late May to July.
The longer term downtrend originating from 2018 continues with full force
well into August.
There is role reversal with 12480 now presenting resistance to the current
recovery which pushes back down to the more minor 1.2285. 1.2285 does
half influence but it didn’t produce any large scale reversals like the other
levels marked earlier. That being said it lines up with the downswing point in
late August and offers adequate support as the market remains flat at this
current time.
A few minor dips below 1.2285 are quickly overcome as strong green spikes
send the British Pound straight through 1.2480 to contact 1.2650. If there was
volume here it would likely also be in the form of one or several large green
spikes. In this case it doesn’t matter there is no volume the price action is
more than adequate to represent the bullish strength now.
After recontacting 1.2650 the market has one down day that is short lived as a
row of green forms well into the upper 1.200s. After that it is quite natural to
see the market remain flat to slightly inclined before the next surge up to the
previous significant resistance range. The market can’t remain on such a
steep trajectory for a sustained period of time. There needs to be periods to
relieve selling pressure that mainly occurs from profit taking when market
participants sell to secure a profit while the market is still strongly held up.
This was also seen with the Spotify chart in the last case where the strong
uptrend paused for a few brief periods to allow for selling into strength for
profit taking, and to overcome short term uncertainty that may arise after
such a drastic move back up.
The previous lower 1.3000s continue to provide strong resistance as the
market is unable to strongly close above it despite temporary penetration over
1.3280 and 1.3380. In fact the market steadily forms lower highs to build
strong downward pressure to start off 2020.
Indeed a similar situation to the last few years as the market crashes straight
through the mid to lower 1.2000s in March with a near vertical drop.
However that being said the 3 blue circles and the 1.2030 level highlight the
areas where even this strong downtrend was temporarily halted for a day or
three. Thus support was still present to a small degree and for a brief time
span even during a strong descent. After the recovery starting in late march
the market stabilizes much more into a tighter range concentrated around the
low to mid 1.2000s area marked out earlier.
A different market with the Litecoin to US Dollar chart and switched to the
15 minute time frame, but the same core principles still apply in identifying
effective support/resistance.
Eventually the downtrend finds stronger opposition as it approaches 43.10 as
evidenced by the more neutral price action. Furthermore the 44.00 and 43.35
levels could be added for greater detail in understanding barriers to price
movement later on. However we started with the 4 levels at the beginning to
reduce clutter on the chart with too many levels and to only identify the price
levels and ranges that had the greatest influence in the past few days.
43.10 holds on but it is still under pressure.
A familiar sight as the strong 43.10 level gives way to the longer term
downtrend. Yet it still offers limited opposition to the bearish move as
highlighted by the 2 blue circles. These areas saw the temporary pause before
the nose dive below 43.10.
Further on another large range forms in the 41.60 to 42.80 area similar to the
kind of price action before the big surge on the Spotify chart seen earlier. On
the way back to 43.10 we can see a strong passing of resistance highlighted
by the blue rectangle at 42.80 and 43.10 and a minor pause at 43.35.
Later on a sideways range forms before surpassing 44. Another normal
feature seen earlier too, as the market needs to stabilize after such a drastic
move. In this case to relieve selling pressure from profit taking after such a
bullish surge.
Once again there are all the key features discussed with the highlighting here
of sideways price action around 43.70, followed by a brief pause and minor
resistance at 44.00 prior to the strong surge with spiking green price action
and volume. As well there are the normal swing points forming at the very
major resistance range marked earlier around the 45s.
Then when we use the daily time frame to further enhance the analysis there
is plenty of crossover. This is especially true for the 45.50-45.80 range which
was also influential on the longer term daily time frame. Thus it is no surprise
since the 45s were important on the daily time frame that they had greater
influence in the intraday 15 minute time frame when compared to the other
levels which were less influential in comparison.
 Trend Lines
Trend lines are nearly the same as support/resistance price levels and ranges.
However they incorporate elements of direction and time. It is best to use the
horizontal price levels and ranges for support/resistance when trying to
determine areas of interest and contention in the market that will likely
produce reversals and sideways price action. Trend lines can be used for that
purpose to a degree, but they are best employed as guidelines. Trend lines are
a basic yet effective method of determining the strength or weakness of a
trend, as well as approximate time spans that will be more important in the
market. They are also integral in identifying chart patterns and for analysis
that involves the combination of price and time analysis.
Trend lines build on everything discussed thus far including the use of
volume. The following examples highlight the process of plotting trend lines
and the key features to look out for.

We begin with the Bitcoin case that was covered when identifying horizontal
support/resistance. All those levels such as 7100 and 10820 are strictly
horizontal price levels and ranges since they only cover the left to right side
of the chart. In order to gather more information about strength, direction,
and time, we need to use lines and ranges that are angled. In other words we
need to use the trend lines which are diagonal lines.
At this point in history it was not known for sure if Bitcoin had peaked just
below 20000. We of course know it was the peak due to the benefit of
hindsight. However like in all the other case studies we shall examine the
application of trend lines that will be limited to the information that would
have been available on the chart at the current late December 2017 time
period. Here there was a clear new downswing around 16500 forming a lower
high.
Unlike flat horizontal price levels and ranges used for support/resistance,
trend lines cannot be drawn with a single swing point. A minimum of two
swing points is required to draw a trend line. This is because you actually do
need two points from the X axis on the chart, in other words two points in
time. Thus swing points combine elements of time and price when they are
plotted.
During the current time period displayed on the chart there is a fairly steep
angle of descent. Remember from the earlier discussion about price action, it
is not necessary to measure how many degrees the trend line angle is. It is
possible to tell just by visual inspection. Moreover the descending trend line
drawn above is even steeper because the trend line is plotted running through
the highest point of those two swing points. There is no penetration of price
above these two swing points because the volume is normal or lower than
normal. If the volume was higher it would be acceptable to lower the angle
and have the trend line contact the opening or closing prices of one or both
swing points, resulting in some natural penetration of price above the trend
line. This is the same as flat horizontal support and resistance. It is natural for
temporary penetration of a price level or range, if there is higher volume.
Since the descending trend line here is steep it is less stable. Often steep trend
lines will soon have price pass through them as seen above. In this case and
at this time period of the 2018 new year, it tells us the descent is strong but it
is slightly too much selling too fast. Thus price as highlighted by the blue
circle easily passes back above the trend line with low but consistent green
price action and volume. You may recall this is similar to the feature of flat
horizontal support/resistance where price often goes sideways before
breaking past a price level.
Later on the strong descent continues, demonstrating that the weak bullish
volume has indeed been part of a relatively minor bounce. The bigger picture
is still bearish as the 16500 area becomes the site of a new downswing unable
to pass the most recent swing high.
A trend line is more valid, effective, and reliable when it has not been broken
through. Thus it is sensible to readjust the trend line to be plotted through the
more recent swing high that just formed. This swing point also has no price
penetration above it since the volume is exceedingly and relatively low. It
would not make sense to run that second point of the trend line further into
the recent downswing to have some price penetration of the swing point
above the trend line, because naturally such low volume is rarely able to
produce such price action.
Bitcoin forms a steady upswing off 7100 but as soon as it reaches the 10820-
12330 price range it naturally encounters resistance. Even if that price range
was not identified the descending trend line adequately identifies resistance
around this price range as Bitcoin rises towards it now. Additionally we are
also given some information about the strength of the prior longer term
decent, in that it is likely to push back down on the recent upswing that
formed off 7100. Furthermore the descending trend line also reveals an
approximate time range when the 10820-12330 price range will have stronger
resistance potential, as their is confluence at this area where trend line and
resistance range intersect. Similar to flat horizontal support and resistance as
price now approaches the trend line it can naturally begin to stall sideways.
Another sharp reversal develops upon direct contact with the trend line.
Sharp reversals on trend lines also add to their validity as they do with
support/resistance.
Later on it is essentially a repeat with another downswing forming at 10820
following a temporary rise upon breaking above the trend line. Once again
this demonstrates the downtrend is in need of a rest and selling pressure has
subsided in the short to medium term, but the bigger picture is still one of an
overwhelmingly large downtrend. Especially as the market fails to get back
above the recent downswing at 10820 from mid February and selling pressure
increases upon dropping below the 10000 mark. Though we can still see the
influence of the broken trend line in the highlighted purple rectangle, where
price gently slides down during the return back to 7100.
After adjusting the descending trend line once more it is very apparent with
the zoomed out view above, as to the strength and scale of the decline.
When price eventually recovered off 7100 again it broke the trend line and
like before you can see the characteristic similar to flat horizontal
support/resistance. Price stall slightly before breaking above the trend line,
since it still offers some degree of resistance. Additionally you may have also
noticed each time price broke through the trend line it was at an area where
flat horizontal supporting and resisting price ranges could be drawn. This is
another common and natural feature of trend lines.
Overall the initial steep downtrend does end as the market rises heading into
May. However Bitcoin doesn’t recover at that time. Instead it falls into what
can be called a sideways range for several months longer. In the longer term
perspective it is a neutral to slightly declined range that serves as a
consolidation phase before breaking below the 7100 area to begin a new
phase towards lower prices. Thus here the trend line was useful in
determining approximate price ranges and times where there would be
stronger resistance to the temporary recoveries back up.
The following case of Costco stock contrasts from the previous Bitcoin chart
in that it is a trend line that is inclined and providing support, and it is much
more stable since it is at a shallower angle.
Overall the first swing point on the trend line has low volume at the sharp
point where price reverses suddenly from a strong bearish drop to a steady
bullish rise. Thus there is accordingly low penetration of this upswing point
below the trend line.
The second swing point by contrast has high volume and an even sharper and
more rapid reversal. Thus this swing point can naturally penetrate below the
trend line. Once again it is not necessary but it helps to know candle patterns.
This swing point is on a bull hammer candle so the closing price is a good
place to run the initial trend line through.
These are realistic chart example showing what happens before, during, and
after the chart is analyzed. In this case the trend line is decent but in hindsight
it could have been improved. Learning this way is far more effective than
looking at a chart in hindsight right from the beginning and seeing picture
perfect cases of support/resistance each time.
As seen in the Bitcoin example and the Spotify stock chart, it is sensible to
adjust your analysis accordingly if developments in price action present the
need. Here there is a need to adjust the trend line lower to accommodate the
two recent upswings that are still on the general trajectory as the original
trend line.
The results have improved as the stall and subsequent sharp upswing at 300
are more accurately captured.
Returning back to an earlier example, the SPY S&P500 index ETF
demonstrates that these same trend line principles can be applied to a variety
of contexts, in this case a shorter time frame like this 15 minute chart.
Some penetration of the sharp upswing point here with direct contact of
opening and closing prices on the trend line due to above normal volume.
A similar situation for the second swing point which also has penetration
slightly below the trend line and direct contact with the opening and closing
prices due to the higher volume.
Even though there is no swing point and upward reversal off this supporting
trend line and the 322.70 area, we are able to observe charts as they are in
reality. Nothing is guaranteed and this case is no exception. Although the
trend line was strong and stable with valid swing points it only stalled price
sideways as the drop was poised to attempt a break lower. Support was still
present but once again since there was no upswing it was more a case of
support in the secondary role of stalling price action sideways before the next
phase of the drop.
Similar to the situation when drawing flat horizontal support/resistance, the
trend line using major swing points in the intraday 15 minute time frame
transfers well as we see alignment with swing points on the daily chart. Thus
the congruence across time frames adds further validity, accuracy, and
reliability.
Crude oil futures allow us to examine a case of plotting reliable trend lines
without necessarily using volume, just as would be the case with other charts
such as forex charts.
A different market and time frame yet the overall process is reminiscent of
the last example using the SPY S&P500 ETF chart in the 15 minute time
frame.
Like flat horizontal support and resistance, multiple trend lines can be drawn
for greater detail, especially when price action forms suitable structures such
as the row of swing points shown above during a stable long term up trend.
Trend lines can also be thought of as zones and ranges instead of exact lines
similar to how flat horizontal support/resistance is more realistically a price
range and not an exact price level. Technically both the solid and dotted trend
lines are valid, they both cross at least two swing points. However since there
is no volume to reference for making finer adjustments based on how high
the volume is to determine the natural amount of penetration of swing points
past the trend line, it is still possible to use price action alone.
The uptrend eventually ends and similar to the example of the SPY S&P500
ETF chart it is a strong decline and the trend lines only offer a minor pause
before the market drops lower.
The same is true for the longer term trend line that was drawn first. They are
all valid trend lines but since it is another case of an overwhelming
downtrend they are only short lived neutral ranges. Whether the trend lines
are drawn contacting the absolute lows of the upswings with no penetration
through the trend line, or they are drawn with price piercing the trend line
and contact with opening and closing prices, the end results are still similar.
As illustrated by the highlighted yellow circles the next definitive move down
naturally has price close below either trend line variation.
Furthermore even after the first trend line was broken through it continued to
have influence when it reversed roles from support to resistance. Similar to
flat horizontal support/resistance levels, role reversal also adds to the validity
and strength of trend lines.
As seen above the upper trend lines are in a more short to medium term
context as they were originally drawn from early 2018.
When they are extended further back in time they also naturally align with a
upswings from a prior stable uptrend from the period 2016-2017. In addition
they intersect with a downswing from early 2016 to demonstrate another case
of role reversal adding to the validity and strength of a trend line.
 Channels
Channels are to trend lines what trading ranges are to flat horizontal
support/resistance. They highlight a broader area of interest for market
participants. Except since trend lines incorporate elements of direction,
trajectory, and time, they provide additional information. Channels offer
additional guidance to single trend lines.

Continuing on with the previous chart of crude oil futures, a new trend line is
added above.
It is fairly parallel to form a parallel channel. In reality it will be less common
to have both trend lines of a “parallel channel” to line up exactly parallel at
the exact same angles.
A similar situation existed further back during the period 2016-2017.
Channels are normally a combination of two trend lines that are relatively
parallel as shown in the first two instances. Such a formation indicates a
stable trend in a broader context of time and price range. The buying and
selling forces are fairly balanced in both inclines to gradually lift price
higher. The orange region in later 2017 could be called a “channel” in that it
combines two trend lines and represents the “flow,” “trajectory,” or
“channelling” of price over a broader price and time range. However it is not
remotely parallel as the bottom portion is on a much greater incline. It is
more of akin to a wedge or ascending triangle formation, where price is also
inclined up but there is stronger bias due to the bottom portion being at a
drastically steeper angle.
Though overall “channel” is still technically an appropriate word in the
linguistic sense. It is still a representation of “channelling” the “flow” and
direction in a certain band of price and time range. Much the same way radio
signals, or waves of light fall into a spectrum and can be divided into
different channels and ranges. When it comes to technical analysis of
financial charts “channel” often refers to the first to kinds of instances of
“parallel” price movement. Other formations that are more skewed are
referred to in the category of triangles and wedges. As well flatter ranges are
more commonly called trading ranges as opposed to flat channels.
A standard trend line is drawn on the Lululemon Athletica stock chart and
right from the start it is obviously steep and not surprisingly has price pass
below it quite soon.
The orange region highlights a much stabler and sustainable path that allowed
for the stock price to steadily rise far into the future.
Note that the trend line drawn at the beginning is still approximately
influential as it is close to the site of the major downward reversal in early
2020.
Then in March a similar steep trend line can be drawn when the market
makes a rapid recovery.
A similar situation unfolds as the steep trend line is broken. While at the
same time the incline stabilizes into a shallower angle, as shown by the blue
trend lines.
The new channel is much steeper than the previous one but nonetheless it is
still a more stable path than the single trend line drawn at the origin of the
current uptrend that started in March 2020.
The same characteristics of higher and/or constant volume accompanying the
break of barriers is still present here in the context of channels. This
particular instance at the end of May demonstrates Lululemon stock price is
steepening trajectory once more to reach for newer highs with very bullish
price action and volume similar to the beginning of the uptrend in March.
The example of LYFT stock chart provides a comprehensive example of all
the concepts discussed thus far. Including an extra emphasis on channels and
an instance of a newly listed stock on the market as LYFT during this time
period had been trading on the stock market for less than a year.
Although things started off quite bearish LYFT still had a relatively stable
phase heading into 2020 with a shallow upward channel. On the first two
charts starting from October 2019 to the 2020 new year it might have been
difficult to say for sure if the initial bearish move would continue with the
same strength and drop below 2020. However it became quite clear even
without the benefit of hindsight here. Since there are some of the classic
characteristics of good support/resistance, trend lines, and channels that
appear, particularly around early to mid February 2020. At that time it was
clear a channel was firmly established, along with a recent sharp dive in price
and increase in red bearish volume. Eventually this rapid decline stopped
right on the firm lower trend line of the channel, which provided temporary
supporting force with a sideways range. Given such context the large drop
that followed was to be expected. There was the initial bearish drop right
from the IPO date until the formation of the channel starting in October 2019.
Then those more recent and rapid bearish developments gave additional
rationale for a likely break of the channel and continuation of the longer term
drop.
As April draws to a close it is clear price is developing a recovery after the
temporary dip below 20.00. A stable channel can not be drawn yet since the
upswings are at a much steeper angle than the downswings which have so far
formed a very stable incline similar to the prior channel.
After a relatively short wait LYFT makes a rapid move back up to the new
trend line which promptly provides resistance for the third time in a row. The
resulting drop and subsequent upswing forms the relatively parallel bottom
trend line to give us a clear channel. This provides another example of the
characteristics of increased volume, especially near a very sharp swing point
such as this one where price reversed up almost instantaneously.
Overall the second channel is similar to the first one in many respects. It has
a shallow incline and that is in large part why it also had a relatively long life
span of about 3 months. A similar stalling appeared upon contact with the
lower boundary in the June-July period before the current break lower.
Once more there are the natural increases in volume quantity and/or
consistency near contentious points, in this case the upper and lower
boundaries of the channel. The volume at the site of the downward break
from June-July is slightly more subtle but compared to the surrounding days
the days of the decisive bearish moves have higher bearish volume to tip the
scales ever further downward.
An additional feature clearly demonstrated here is that the site of major swing
points often near the beginning and end of a channel are the approximate
price levels and ranges of influential flat and horizontal resistance/support.
Next Advanced Micro Devices (AMD) stock provides a contrasting start to
the same approximate time period from April 2019. A moderate to steep
channel appears after a strong reversal formed near the end of 2018.
The uptrend and therefore the channel, technically start in 2019 when price
fails to drop lower and instead forms a sharp reversal which eventually
surpasses the late 2018 highs. However here the trend lines can be extended
backwards to line up with the some approximate swing point areas in the case
of the upper trend line. This is not necessary but it does show that
approximate price trajectory has additional influence from those late 2018
swing points.
Although this channel is obviously steeper than the shallow and stable
channels from the previous LYFT example, the overall formation spans a
similar 3 months period at this point. Normally steeper inclines like this are
less long lived. However there are adequate volume spikes upon contact with
the upper and lower bounds of the channel to to contain price within the
approximate trajectory.
The most important parts of a channel are the lower and upper trend lines,
similar to how the upper and lower horizontal lines are the most important
and distinct features of a flat trading range. However it is still possible and
useful to draw trend lines and channels in between. It is not entirely
necessary in most all cases but does illustrate the characteristics of sideways
to slightly inclined price action when price comes into contact with the
influence of the middle trend line here.
Eventually AMD breaks the lower trend line and moves relatively sideways
instead of straight down.
The channel was obviously broken, but it can still exert influence later on,
such as in December where price overcomes the resistance of the lower trend
line and reenters the approximate trajectory it had been on prior to the earlier
break.
In this case AMD forms a normal flat horizontal trading range as opposed to
an angled channel. Though it is similar to other channel examples in that
price is still stabilizing in a resting phase before a big breakout. Price is also
still being channelled on a certain path albeit a flat sideways path as opposed
to an angled trajectory.
Also note the typical characteristic of increased volume at a contentious area.
In this case the bullish spike to easily surpass the previously firm 58.30
resistance.
The last thing to take away from this AMD example is to realize trend lines
and channels are slightly less effective and influential after price has broken
through either their upper or lower boundaries. As seen here and in other
examples price was still influenced by the trend lines after they were broken
but that influence was to a lower degree as evidence by the formation of a
mainly sideways rather than inclined range with AMD. Channels and trend
lines are not invalidated entirely after price breaks through them. Rather it is
best to remember to use them as past references with diminished influence
rather than strict support/resistance.
Flat horizontal support/resistance doesn’t suffer the same drawback because
they are fixed levels and ranges. Trend lines and channels are dynamic due to
the element of price and time that effects their angles. Strictly horizontal
price on the other hand is only one dimension of the chart that doesn’t change
angle. Moreover far more market participants will key in on flat horizontal
prices as opposed to trend lines and channels which aren’t as easily identified
and are subject to some variability in terms of their angles, especially if no
volume is available on the chart.
Returning back to the Zoom stock chart demonstrates the difference between
flat trading ranges, channels, and combining the two in the form of a
horizontal price level paired with a trend line. All 3 of these formations can
produce large breakouts, but the flat trading range is of course inherently
more neutral and not as predictable. Channels are inclined and show clear up
or downward bias from the start and when the upper boundary is crossed it
will often be a steepening of bullish price action. A break of the lower
boundary as we have seen is often a steepening of bearish price action. Then
when there is one trend line and one flat horizontal support combined we get
a mix. Often these are called triangle formations.
Like a normal trend line Zoom stock is gradually tipped upwards on the
approximate trajectory and the constant and significant increase in volume
towards the end of May accompanies the spike to easily pass the prior all
time high resistance around 160. These combined features form an ascending
triangle. Thus it has the angled nature of a channel and trend line that
provides an approximate guideline for price trajectory. While at the same
time the fixed and clear element of flat horizontal resistance/support is
present. The end result is a clear area of interest that has a bullish bias, in this
case it is due to the inclining trend line applying bullish pressure to the
horizontal resistance range around 160.
It is indeed a classic ascending triangle formation that clears resistance to
strongly carry on the longer term up trend. Also just like most all formations
the ascending triangle has a counterpart in the form of the descending triangle
with a horizontal support that has a descending trend line applying bearish
selling pressure. The result is a formation or pattern that is naturally going to
increase the chances of a longer term preexisting bearish downtrend.
At this point we begin to see the connection and evolution of technical
analysis elements. Simple price action and volume relate to swing points,
which in turn leads to identifying support/resistance price levels and ranges.
Eventually trend lines and channels introduce more dynamic elements such
as time and trajectory to the analysis. Now the ascending and descending
triangles provide the transition into the more intermediate topic of chart
patterns and formations, which are add an entirely new layer of utility and
complexity to technical analysis.
To learn more about chart patterns like the ascending and descending
triangle, along with other technical analysis methods visit...
https://www.ascencore.com/books
The concepts are fairly straightforward after an initial learning curve. Just
like the concepts discussed here chart patterns, and even more advanced
techniques present the greatest difficulty when trying to apply them on real
live charts that are highly dynamic. It is difficult to efficiently and safely
learn and develop analysis skills without actually spending time and risking
money on real live charts, trades, and investments. Real chart examples
providing case studies of what happens before, during, and after analysis,
allow for a condensed learning and practising experience without the risk of
entering live trades and investments. As well it saves time and energy
because finding and analyzing appropriate chart formations takes a lot of
effort.

Now there’s one more situation we haven’t covered yet in regards to

channels. That is indeed the case of charts that don’t have volume.
Returning back to the forex chart of the GBP/USD allows for such a case.
From the start there are two relatively parallel descending trend lines.
They contain price within a relatively broad band on the way down. Yet we
still see all the core characteristics of support/resistance price action we have
discussed thus far.
This is especially true for the mid October period highlighted in yellow.
Right when the upper trend line of the channel and the 1.2650 horizontal
support are passed. There is still minor resistance present despite the strong
price action. So even though there is no volume showing green spikes during
this near vertical climb. The analysis is still quite accurate, particularly at this
exact point of confluence of trend line, channel, and horizontal resistance
level.
The same features can be seen later on during the brief pauses of the rapid
decline in March. In addition similar to previous cases, the lower trend line
here still has influence even after the channel was broken through to return to
the previous 2019 highs.
Overall this is quite a bad channel in terms of the way it was formed with
wide trend lines that gradually converged. It resembles somewhat of a funnel
or wedge formation. This is unfortunate but sometimes such formations are
drawn due to error on the part of traders and investors and/or the chart not
providing adequate swing points for more parallel trend lines. In any case the
core principles of swing points and price action were followed to produce
useful guidelines
A skewed downward channel at a fairly shallow angle formed after peaking
in late 2019. This again exhibits many of the previous core characteristics
discussed thus far. Especially in regards to downswings forming on the
1.3160 resistance that intersected with the upper trend line of the channel.
Perhaps even more significant is the break out of the channel to drop below
the 1.2650 level which proved to be significant earlier during the prior break
above it. Further into 2020 this becomes highly relevant as this price range is
active in producing two downswings from April to May. Thus even if you
didn’t identify that channel marked in orange as it was developing, it served
as a key landmark that bolstered the validity and strength of the 1.2650 area
which continued to have great influence.
A line chart with dots representing closing prices illustrates the channel
would still be useful whether the swing points penetrated the channel slightly
more or slightly less. Finally the drastic upswing in mid to late March formed
off the bottom trend line. This demonstrates the original channel still had
influence even after price broke out of it in October 2019. More importantly
it demonstrates the bottom trend line still remained highly valid and
influential to produce such a major reversal. Due to the market not breaking
the lower portion of the channel and thus the lower trend line was technically
not broken even though the upper trend line and overall channel were.

Summary Conclusion And Final Tips

Even though the techniques and concepts discussed here were relatively
basic, they essentially underpin the core foundation of simple yet effective
technical analysis. Far more advanced techniques utilize key ideas that have
been discussed to further enhance analysis of charts regardless of the time
period, time frame, or asset. It is highly beneficial to keep practising the skills
of plotting support/resistance and trend lines on a variety of charts and time
frames even if you don’t intend to trade or invest the assets of all the charts
you examine. Skill is only developed and maintained when it is constantly
applied in realistic contexts.

For more on trading, charting, and the markets visit my website at

www.ascencore.com/