If you were to keep only one thing from technical analysis, it would be this: identify the trend, and locate the zones where the price has historically reacted.
What is a trend?
An uptrend has a simple definition: a succession of higher highs and higher lows. A downtrend, the opposite. As long as that structure holds, the trend is intact; when it breaks, the trend is called into question.
Supports and resistances
A support is a level where demand has been enough, several times, to halt a fall. A resistance is a level where supply has halted a rise. They are not magic lines: they are zones of collective memory, where many participants hold orders and recollections.
The inversion rule
When a resistance is cleanly broken, it often becomes a support (and vice versa). Those who sold at the level buy back, those who missed out want to enter on a pullback — the zone changes role.
Beware false signals
A break with no volume and no follow-through is often a trap. Demand confirmation: a clean close beyond the level, ideally on volume.
À retenir
- ✓An uptrend = higher highs and higher lows.
- ✓Supports and resistances are zones, not exact lines.
- ✓A broken resistance often becomes a support, and conversely.