Figure 4.3a This example shows that the support level and resistance level rise in turn in the upward trend. Points 2 and 4 are support levels,
Usually formed by the past upward rebound low point; Points 1 and 3 are blocking bits, usually marked by past peaks.
Figure 4.3b This figure shows the support level and resistance level in the downward trend.
Block, also expressed as price level or chart area. Contrary to the support, on top of it, the seller's pressure blocked the buyer's progress, so the price turned from rising to falling. The blocking level is usually marked by the previous peak. In Figures 4.3a and B, points 1 and 3 are two blocking levels, respectively. Figure 4.3a shows the upward trend. In the upward trend, the support level and resistance level show a gradual upward trend. Figure 4.3b shows a downward trend, in which the peaks and valleys all decrease in turn. In this downward trend, points 1 and 3 are the support levels below the market, and points 2 and 4 are the resistance levels above the market.
In the upward trend, the resistance level means that the upward momentum will rest here, but sooner or later it will cross upwards. In the downward trend, the support level is not enough to support the long-term decline of the market, but at least it can be temporarily frustrated.
In order to fully understand the trend theory, we must really understand the two concepts of support and resistance. If the upward trend is to continue, each successive low (support level) must be higher than the previous low. Each successive high point (blocking level) must also be higher than the previous high point. In the upward trend, if the new round of adjustment has been reduced to the previous low level, this may be an early warning that the upward trend is coming to an end, or at least it is about to degenerate into a horizontal extension trend. If this support level is broken down, it may mean that the trend is about to turn from up to down.
In the upward trend, whenever the market tries to stop the previous peak from going up, this upward trend is always at a critical moment. Once the market can't cross the previous high point in the upward trend, or can't break through the support of the previous low point in the downward trend, it sends the first warning signal that the current trend is about to change. In the process of testing these support and resistance levels in the market, various forms will be formed on the chart, which is the so-called price form. In the fifth and sixth chapters, we will show how the market hints through various price forms whether it is in the process of trend reversal or just in the rest of the existing trend. In any case, building these forms of basic bricks and stones is still a level of support and resistance.
Figures 4.4a to c are typical examples of trend reversal. Note that in Figure 4.4a, the price is at point 5. At first, it could not surpass the previous high point (point 3), and then it turned around and fell below the previous low point shown in point 4. In fact, this trend reversal can be judged simply by observing the support level and resistance level. This inverted form is called double top.
Figure 4.4a An example of trend reversal. At point 5, the price cannot exceed the past peak point 3, and then to
The decline broke through the previous low of 4, which constituted a reversal of the downward trend. This form is called "double roof".
Figure 4.4b Example of bottom inversion. Usually the first sign of the bottom shape is that the price can be maintained at 5 o'clock.
Held above the previous low of 3, this bottom shape is verified when the price crosses the previous high of 4.