Trends, support and resistance

• An uptrend is a series of higher highs and higher lows.
• A downtrend is a series of lower highs and lower lows.
• A range (sideways market) is when the price moves between roughly the same high and low.

A trend line can be drawn through the lows of an uptrend or the highs of a downtrend. The longer and more often a line has been respected, the more attention traders pay to it.

• Support is a price level where falling prices have stopped before, because buyers became active.
• Resistance is a level where rising prices have stopped before, because sellers became active.

Round numbers and previous highs and lows often act as such levels.

When the price moves decisively through a level — especially with high volume — it is called a breakout. A broken resistance sometimes later acts as support, and the other way round.

A false breakout happens when the price crosses a level and quickly returns. This is common, which is why many traders wait for confirmation.

Levels are zones, not exact lines, and different people draw them differently. Technical analysis describes probabilities and market psychology, not certainties. News can override any chart.