Support: A price level where buying pressure is likely to be strong enough to prevent the price from falling further. Think of it as the 'floor' for the price. Resistance: A price level where selling pressure is expected to be strong enough to prevent the price from rising further. Think of this as the 'ceiling' for the price. How Resistance Becomes Support
Initial Resistance: When a stock or index like Nifty faces resistance at a particular price level, it means sellers are dominant and preventing the price from rising further. Breakout: If there's a surge in buying pressure that overcomes the resistance level, there's a breakout. This typically occurs due to factors like positive news or strong market sentiment. Retest: After a breakout, it's common for the price to pull back and retest the previous resistance level. Role Reversal: If the previous resistance level holds during the retest and buyers step in, it indicates that the level has flipped to become a support. Now, buyers are likely to defend this price zone from further dips. Why it Matters for Intraday Trading
Entry Points: Recognizing resistance-turned-support can offer favorable entry points for intraday trades as you expect buyers to be active at this level. Stop-Loss Placement: These zones can also be useful for placing stop-loss orders. If the price breaks below the newly established support, it suggests a change in market sentiment. Example:
Let's say Nifty is facing resistance at 18,000. However, it breaks above this level and then retests 18,000, where it finds buying interest. This indicates that 18,000 is now likely acting as support.
Important Notes:
Confirmation: Look for other indicators (volume increase, candlestick patterns) to confirm that a resistance has truly turned into support. Not always guaranteed: Market dynamics can change quickly, and sometimes, support levels can be broken.
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