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Chapter 4. More Than Just Pretty Picture... > Support and Resistance Levels

Support and Resistance Levels

Support Zones

An awareness of patterns associated with support zones (areas usually associated with previous trading ranges, in which prices find support against further decline) and resistance areas (areas that resist further price advance) enables investors to more accurately define the direction of significant market trends. Such patterns also suggest areas in which price reversals are likely to take place.

Stock market advances do not take place in a straight line. They generally take place in a steplike series of advance, flat or retracement period, further advance, another flat or retracement period, and so forth.


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