so what our support and resistance in the stock market in this video I'm gonna
go over how to draw and use support and resistance to either make or save a lot
of money hey how's it going on this channel you will learn the steps I took
to go from trading with a full-time job to trading as a full-time job so if
you're new here consider subscribing and today we're going our support and
resistance so the basic idea behind support and resistance is that you can
predict what the market will do based on previous highs and lows of the market
and with those you can base trades or your general trading strategy off of
those levels right now we are looking at the stock market between the year 1990
and the year 2014 on a monthly chart so every candlestick on here is a month's
worth of data and I always think it is very important to run larger term
timeframes support and resistance with idea that it shows you where the market
is gonna go in the future and kind of where we are in the market as a whole it
allows you to be able to spot a bear market or a huge reversal in the market
or know that we are gonna start a huge bullish trend in the market looking at
the 2000 tech bubble the Oh 8 housing market crash and afterwards the bull
market rally that we had drawing a few simple lines could have either made you
or saved you a lot of money as you saw after the o2 bubble if you once you saw
the market trending down and then start trending up you could have drawn a what
we would call a resistance level at these highs up here because the idea is
the market topped out here it couldn't go any higher and it began to sell off
and go way down and the idea is once it comes up and hits that level again it is
gonna have trouble getting through you don't know if it's going to get through
or sell-off again but idea is it gives you an idea and a heads
up and a warning to either close all your positions that you have long or get
ready to bet the market is gonna go down so you can see that once the market did
get up to that same level it didn't break through it and it began to sell
off into the huge Oh 8 crash afterwards a big thing about these levels is they
don't have to be perfect as you can see I didn't draw the line up here at this
level which you could have and the idea is that it's making a zone the market
doesn't have to hold the resistance level line exactly the idea is that the
market had trouble in this area it's sold off and then it rallied back up to
that area and then it had trouble again there once it gets to that level you
need to be heads up and realize that the market is going to have trouble again
potentially and that you might need to change your trading based on that after
it hit that level it sold off into the Oh a crash and using this previous low
down here we could have looked for where the market was going to bottom so
drawing line I'd line down here to use as a support level we can see that the
market did bottom in this zone just like the previous bottom was so again it did
go through it with the idea is that zone held and the market rallied from there
one reason why I'd like to think that maybe these zones don't hold perfectly
is because when markets are at their peak or markets are at their bottom
people are feeling high levels of emotion they aren't thinking right when
a market bottoms out that is when people are feeling the most fear and they will
just be selling without thinking and so that might push the market through that
last little bit which forces it through that zone that might hold but the idea
is that buyers do come in there and it holds that zone as support
and then it begins to rally as it held that support level the market began to
rally it but up here all the way back to our resistance level where we would have
known that the market might have trouble getting through this time you can see
that the market broke through this level a big thing is when a support level or
resistance level gets broken that can be a big shift in the overall trend once it
broke through this resistance level the market started a huge rally over the
next few years another thing I want to point out is once it broke through this
level is it came back down and tapped the resistance line and quite often when
something breaks through a major resistance or support level it'll become
the opposite so as here the market broke through that resistance level and then
came down and tapped that level again and instead of resistance it was now
support once it tapped that level buyers came in again and it began to rally and
took off zooming out to look at the market over the last 20 years with those
support and resistance levels we can see that we made a channel in the market and
the idea is that this was a sideways channel and that's a trend in the market
so for about 10 or 15 years the market was in a sideways trend once it broke
out of that trend as we can see right here by when it broke through that
resistance level the trend changes because it broke through the top of the
channel that means it's probably going to start a new trend to the upside and
as we can see here it has started a huge upward trend over the last years you
could have seen that coming with just this simple support and
resistance level so to go into more analysis as we broke out of this channel
you can see that the market had struggle in this zone for about two years so you
could say that on a shorter time frame chart it went into another sideways
channel that we can see right here and let's zoom in and we can use support
and resistance levels to look at this area in better detail so because it's on
a monthly chart I'm going to zoom into a weekly chart so we can see these swings
a little bit better so this is that same area that the
market struggled in for a few years but just on a smaller time frame with each
candle being a week instead of a month so as we saw the market China of top out
here and sell-off we could have looked to the left side and used previous lows
to draw price support levels and try and see a bottom and as the market sold off
into this area you can see that it didn't get really super close to that
level but it came to a similar zone and found a bottom as it began to rally back
up into the old high levels we could have looked and seen that well the
market was struggling in this area before and it actually sold off from
this so let's use this zone as a support level and as we can see once the market
came up to this support level it struggled it didn't even make it to that
level like it did before but it struggled there again and began to
sell-off back down to this previous support level that we've had drawn and
we can see that it actually broke through this love a little bit by those
wicks poking through but again it held that zone and began to rally back up to
our resistance level that we had drawn previously it struggled against this
resistance level again but it actually eventually broke through here and that
shows us that the resistance level there has been broken and maybe we've broken
out of this sideways trend for the last few years and we might start a new
Uptrend just like the last trend change out of that channel the stock broke
through that resistance level and then came back down and used that area as
support it broke through a decent amount this time but again the idea is that
back down and it held that zone and then the market began to take off and start
that new uptrend again which you could have seen coming based on these just
simple support and resistance levels now these support and resistance levels
both times really work together just kind of like a channel but again
channels are just support and resistance levels that are getting bounced off of
multiple times and it's not breaking either those levels trend lines are
another valuable support or resistance level
they're just diagonal support or resistance levels but they work the same
way as the price either has struggle in that area or once it breaks out of that
area it becomes a very important level to understand and know that the market
is changing the trend that it had previously to show you what I mean by
those trend lines let's go into the most recent price action of the stock market
and zooming in a little bit to this area we could have used a trendline in this
market previously along this area we could have seen that this trend line was
holding the market up based on this support trendline and then using this
trendline here this trendline was holding the market
down and this is more of an upwards trend channel as it bounced off the
bottom and then it would bounce off the top and it traded back and forth in this
channel for the better part of last year and as we see once it broke out of this
channel it came and touched the top of the channel and then made a new trend
and with idea that this is already an upwards trend channel the if it breaks
out of this trend to the upside its gonna start an even stronger uptrend
over the end of 2017 in the beginning of 2018 the market skyrocketed because it
broke out of this upwards channel and created a new extremely
upwards channel or just trend that eventually broke down when the market
corrected itself in the beginning of 2018 and what we can do with this
channel and with these levels is we can actually extend these levels because
quite often these levels will still be used later on and it looks like this
might have got touched multiple times and using this bottom support level of
this previous trend that it broke out of we could have bought the bottom of the
market correction in 2018 or round that zone and actually touched this level
three times and right now the market is still holding this channel down here but
it is still broken through the upwards side of the channel if we extend this to
the right as well you can see that the market struggled to get through this
area again actually and then it topped out on top of it and now we're above
that channel again kind of creating a new trend and a new channel hey thanks
for checking on this video if you want to learn more about trends and spotting
trends check out this video right here and if you just want to learn more about
trading the stock market and reading stock charts make sure to subscribe to
the channel and as always leave any questions or
comments below and make sure to leave the video a thumbs up