Well, in this video I am going to explain support and resistance in such a way that you will understand once and will not forget it for the rest of your life.
Rather, you will be able to guide other people as well. What is support and resistance and how to trade according to it. Well, you want to learn to trade. Look, let me explain it to you in simple language.
First of all, support and resistance is a zone. Zone means it is a level.
What are the levels at which support simply means where the buyers are sitting.
You understand that support means where the buyers are sitting.
Where are the buyers sitting?
At what price are the buyers ready to buy? So we will say this, you understand that the buyers are sitting here. For example, you say today gold is running at 50,000, but if it becomes 25,000 for just one day, will you buy it? For example, I am just asking you, you say yes, maybe I will buy it. You will not buy it. Many people in the world will go crazy to buy it because they know that if the price is falling, we are getting it at a lower price and we will buy it. Whenever any asset is bought, simple economics, whenever something is bought, there is a limited supply of everything in the market. When we are talking about buying shares, shares are not unlimited, gold is not unlimited, then simple demand and supply theory works. As soon as it is bought, then the demand has increased. The demand is that we will buy it and the supply has reduced, then the price goes up. So what is that support where the buyers are sitting and when the price will rise, now you have bought it. Suppose it is priced at 50,000, you bought gold at 25,000, now gold is at 70,000. So at some point of time, a person will want to book profit that the price has gone up, now we sell it. As soon as we sell, there will be supply in the market that is why the price goes down. This is simple logic. So where the buyers are sitting, what is the support, where the sellers are sitting, what is the resistance. Whenever something is sold, its price goes down. For example, today there will be many properties around you which have been sold.
You will also have a house which will be sold. Now everyone will say that we have to sell the house. If everyone wants to sell the house and there is no buyer, what will happen?
Suppose you live in a house worth 1 crore, for example, you live in a house worth 10 crores, then you live in a house worth 1 crore. The neighbor’s house is also worth 1 crore. You say I will sell it for 1 crore. The neighbor said give 80 lakhs, take it. Now as soon as a buyer comes to know that the house next door, which is of equal size, is being sold for 80 lakhs, he will say I will take 80 lakhs. If the neighbor says that I am selling it for 70 lakhs, then he will say that if I sell it for 70 lakhs then you will not sell. Then you will say that I will also sell for less. As soon as you say that I will sell for less, the price will keep falling. And this is what happens. This is human psychology. Human psychology works in the stock market too. Although I have studied it, but let me tell you that this is human psychology. Support means buyers, resistance means sellers. If you understand this, then what will happen from this? Now what will happen from this? There is an advanced version of this which you have to understand. It is understandable that support means buyers and resistance means sellers, but this does not work. Now we have to go a little further. Whenever the price breaks its resistance, that is, the sellers sell, they try to reduce the price, but the buyers say this is cheap, buy it. So the price increases further because when the thing is bought, it will go up further. So the sellers try to reduce the price, but if more buyers come, the price goes up. So when the price breaks its resistance, it tries to meet the next resistance, where sellers are sitting at the next resistance. For example, gold went from 50,000 to 70,000, 70,000 to 80,000, so more people say we will sell at 80,000 also.
So from here the price can go down, but if this also breaks, the price can go up. This is a hypothetical example.
So I was taking the example of gold. Now you should get clarity from this example that if the resistance breaks, the sellers have become weak.
Just understand the psychology. The sellers were here, they sold, but the buyers were strong, they pushed the price to another level. There are sellers sitting there as well.
If that price breaks, the price will go up. This is a simple logic.