Buying at Support or Buying at Resistance

Lloyd W. Coutee

Lloyd W. Coutee

Support buying is typically healthier than resistance buying in terms of risk management.
Buying at resistance is riskier than buying at support because once the stock clears the resistance it will bounce off the new resistance line, but may dip back to prior levels if it isn't strong enough to continue upward.
Which ways is better for you? Why?
 
I'm not sure if I understand the question. This is trading 101, you don't buy at resistance nor sell at support, period.

When a trader buys, he or she expects the price to rise. If you buy at resistance, then that region is not really a resistance from your point of view. By definition resistance is an area where you expect price to fall. So your question doesn't really makes sense.

Of course there are strong and weak support and resistance points, but that's much more subjective. If you're long at the resistance it's because either you don't see it as a resistance or see it as a weak resistance. Anyway, I don't think it's healthy to look for "weak resistance" areas in the long term.

Also, I believe you know but I'll say it anyway:
  • Once a resistance area is cleared, it becomes support, but I believe you know that.
  • Support and resistance are regions, not precise points.
 
It depends on the trend of the market. For instance, if the trend is down, it is unlikely that support levels will hold. Therefore, the only action that makes sense is to wait for a consolidation and sell resistance levels in a down trend. Buying resistance in a down trend is practically asking for trouble. You can probably get away with it in a strong up trend but I wouldn't do it...vice versa for selling support in a strong down trend.
 
Money Trust said:
It depends on the trend of the market. For instance, if the trend is down, it is unlikely that support levels will hold. Therefore, the only action that makes sense is to wait for a consolidation and sell resistance levels in a down trend. Buying resistance in a down trend is practically asking for trouble. You can probably get away with it in a strong up trend but I wouldn't do it...vice versa for selling support in a strong down trend.
More...

If you're in a down trend and buying "resistance", it's not a resistance level, it's a support level. It's only "resistance" if price is coming from below.
 
I think the OP is calling the last high in an up trend resistance, as it is commonly called such.

I could never agree with calling both the last high in an uptrend (A types in the attached) and the last high in a down trend (B types in the attached) resistance. The basis of the activity at these points is entirely different. While it being just a name for a point in the trend, I would think that for some traders the thought of the last high in an uptrend being resistance would cause hesitation to buy below that level or before that level is penetrated. Additionally, with the word resistance itself giving the impression of a dam, it could cause the temptation to sell at that point, which would be going against the trend. And the penetration of resistance in a down trend can indicate a potential change/reversal of the supply demand balance, while the penetration of the last high in an uptrend is just a continuation of the trend.
So I look at A as being nothing more than the last high, and B as (real) resistance.
 

Attachments

  • S&R.JPG
    S&R.JPG
    98.6 KB · Views: 251
Last edited:
Lloyd W. Coutee said:
Support buying is typically healthier than resistance buying in terms of risk management.
Buying at resistance is riskier than buying at support because once the stock clears the resistance it will bounce off the new resistance line, but may dip back to prior levels if it isn't strong enough to continue upward.
Which ways is better for you? Why?
More...

Buying "at resistance".... is overtly risky (might even go so far as saying, "it's WRONG")... about 100% of the time. Such behavior presumes resistance will break.... just from the definition of resistance, a bad bet.
 
Lloyd W. Coutee said:
Support buying is typically healthier than resistance buying in terms of risk management.
Buying at resistance is riskier than buying at support because once the stock clears the resistance it will bounce off the new resistance line, but may dip back to prior levels if it isn't strong enough to continue upward.
Which ways is better for you? Why?
More...
Support.
 
trading range = buy at support sell at resistance
trend = even though most support and resistance fail to reverse the trend.trend reversal happens at support and resistance
 
@lloyd Coutee Well, I would recommend buying at support(demand) and selling at resistance(supply) like what TKOSta74 said. Trend is key in this. Because Trend will Flip-flop these areas. You can take a look at a site that describes how to do it well and has a lot of good free education stuff out that at https://apazones.com
 
You must log in or register to reply here.
Back
Top