DATE: August 27, 2012QUESTION:Can you discuss the terms "support" and "resistance," which are used by traders who study stock charts as part of their decision-making methodology?ANSWER: Support and resistance refer to boundaries or limits on stock charts where prices tend to reverse and move in the opposite direction. The first term, "support," describes a relatively low price level where stock prices tend to stop declining and subsequently trade higher. The second term "resistance," is the opposite of support. Resistance describes a relatively high price level where stock prices tend to stop rising and subsequently trade lower. To learn more about "support" and "resistance," view this week's segment of "Ask the Institute."
Trade options, stocks, futures + forex on a single platform. thinkorswim by TD Ameritrade.
OPTIONS+ is the new mobile options calculator for iPhone users. Download it today.
Get up to $500. Trade commission free for 90 days. Free tools for advanced traders.
Commission Free Trades. Get up to $500 - trade commission free for 90 days & advanced tools.
Download CBOE's new iOS app featuring detailed quotes & option chains, CBOETV, interactive courses, and more.