Hey traders if you're someone that struggles to successfully trade with support and resistance
this is the perfect video for you to watch all the way through we're going
to be talking about support and resistance secrets and I know that for me when I first
got started trading support and resistance did not work for me until I understood the
things that we're going to discuss here in this video so make sure to watch all
the way through and give this video a like if you find it helpful now the first thing
to understand about support and resistance is that support and resistance are not perfect
I see all two commonly Traders thinking that support and resistance levels are to the penny
when the reality is that support and resistance levels are not perfect and this can be a very
big issue especially if you're someone that's using a stop loss order on a trade because what
happens is if we take this example here we can see this stock ramped up it pulled back a bit and
forms this little double bottom here at about two dollars and 53 cents so an inexperienced Trader
might see that level forming buy into this dip and then place a stop loss order at two dollars and 52
cents or 2.51 and inevitably what happens then is they get stopped out on this little pullback here
before it swipes back up and reclaims that support level and then ends up running up to new highs
So Not only would this Trader then have missed out on this potential profit but they also took
a quick and unnecessary loss by getting stopped Out Below that support level the reality is again
that support and resistance are not perfect so you have to make sure to give them some wiggle
room just because this breaks down a couple cents below this support level does not mean
that that support level is no longer valid and the same thing is true with resistance
if we take a look here at this chart for vrax vrax was a big gap up yesterday in pre-market
and we can see here that there is some pretty key resistance that formed early on in the morning in
the 160s now again support and resistance are not perfect so just because there's resistance here in
the 160s and we get this quick false breakout up into the 170s does not mean that this is a
confirmed breakout and does not necessarily mean that this is going to ramp up to new highs in fact
I actually made sure to mention in the market Master group yesterday in pre-market that vrax
is having a very tough time here in the 160s there's been nothing but false breakouts above
that level and because of that it's not a good idea to be going long into the market open until
we get a confirmed breakout above that level well if we fast forward a bit we can see that
there was never a confirmed breakout there was just these quick false breakouts and it ended
up fading all the way down to under one dollar per share the following morning in pre-market
so this is another great example that support and resistance again are not perfect if you're
an inexperienced Trader and you don't necessarily know what to look for when you're looking for
support and resistance you might see this quick breakout Above This 163 level and think that this
is a breakout and the stock is automatically just going to run up to two dollars per share
unfortunately that is not the case and the reality is that that is exactly what these
market makers want retail traders to think they want you to think that this is going to ramp up
to two dollars if it starts breaking above 163. the reason for that is because then these market
makers are going to have people buying up in the 160s and up in the 170s when they're starting to
dump their shares okay so you have to start thinking about the support and resistance
levels as more of support and resistance areas if we get rid of this resistance level here on
this chart and we go ahead and get a box we could draw a box in this entire area here
and we can see that every time the price gets up into this box and up into this resistance area
it pulls back down so what you would want to see in order to get a confirmed breakout and
then potentially a ramp up to two dollars per share would be for some kind of base or for
some kind of support to start forming up here in the 1.60s and then maybe some higher lows
up into the 1.70s and that would be your bullish sign that the stock is going to continue higher
okay now when it comes to actually drawing and visualizing the support and resistance areas
on your charts what I like to recommend doing is looking for these long upper and lower Wicks on
these candlesticks so for example ww was a stock that was running yesterday intraday and one of the
ways that I like to trade these small cap stocks is to wait for them to become a bit overextended
and then to short sell into that extension move so that I can profit from them starting to pull
back so all morning I was waiting for this to be an opportunity to short sell but I wasn't really
seeing any resistance forming I wasn't seeing any blow off top or any exhaustion and that is until
later on in the day so if we fast forward a bit we can see that into the market close we finally
get a big exhaustion move and then if we zoom in a bit here you can see we start to get some long
upper Wicks on these candlesticks again upper and lower wicks for support and resistance can be very
telling of where the supply and demand is starting to shift to the other side these candlesticks just
mean that within this time frame the price was able to spike up here from the 6.70s up to over
seven dollars per share but within that time frame the sellers took control and pushed the price all
the way back down closing this Candlestick only a few cents above the price that it opened and if we
fast forward we could see the same thing happen in the exact same area multiple times here into
the Market close for this day and then once again in extended hours so that's what I like to see
when I'm looking for these key resistance areas on a chart long upper Wicks forming in the same
area and of course the opposite is true when I'm looking for an area of support I like to see that
there are long lower Wicks ideally with strong volume coming in all at the same area and if we
zoom out here we can see that this resistance area played out perfectly so anybody that was looking
to short sell into this area would have made a very nice profit as the stock sold off from that
resistance and is all the way down in the 530s now all right so now that you should have a good idea
of how to find the support and resistance areas on your charts using long upper and lower Wicks
on the candlesticks I wanted to talk a little bit about anticipating a breakout above resistance or
anticipating a breakdown below support I will say that anticipating a breakout in order to get into
a trade is kind of a risky way to trade a breakout but nonetheless this information is really good
to have so I did want to go over that in this video this is going to be a live example here
because this is a stock that is up significantly for the day about 30 percent as of right now we
can see it had a big morning run started to pull back and is now forming some support here in the
3.80s so if we go ahead and draw that line there to represent our support area this is going to
be a really good example of anticipating a breakdown below support because what we see
here is although we do have support and it is holding Above This level it's likely going to
break down below that level and the reason that I know that is because every single time there's a
small bounce off of that support level there's not much volume into these bounces and it comes right
back down to support if this was going to recover above the web and get all the way back up here to
the morning High what you would want to see is that there was strong volume coming into these
dips into this support area we would also want to see that it's starting to form higher lows
and none of those things of course are happening with this example so because of that if you were
in a long position what you would want to do is probably cut losses on your trade before
this even starts to break down because you can anticipate that it is very likely to break down
in the near future the same information can be used to get into short positions you can start
to short sell above support rather than chasing once it starts to break down below support and
that same information is true with resistance if there's a key resistance level on a chart but
there's not much volume coming in every time it runs into that resistance area and on top
of that the stock is still not making lower lows and lower highs there's a good chance
that the stock will end up breaking above that reason distance level now you can see this is
a screenshot of how this ended up playing out later in the day you can see that using the
information that we talked about previously to anticipate a breakdown was very helpful in this
example as it did end up breaking down below that support that was starting to form in the 3.80s
okay so the key lessons here to recap this video about support and resistance is first that support
and resistance are not perfect instead of thinking about them as support and resistance levels think
about them as support and resistance areas second you want to look for long upper Wicks forming in
the same area to identify resistance and long lower Wicks on candlesticks forming in the same
area to identify support these Wicks represent a shift in the supply and the demand for a stock and
they can be a really good indication that support and resistance are forming and third support is
likely to break if volume is low and the bounces off of it are starting to get weak and the same
of course is true with resistance hopefully you found some value in this video and hopefully it
helps you improve your trading with the use of support and resistance if you enjoyed please
make sure to give the video a like And subscribe to the channel so you don't miss out on future
trading videos and if you want to learn more about day trading swing trading and long-term investing
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anyway thank you again for watching I hope you enjoyed and good luck with your Trading
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