support and resistance

[ranjan]

hi folks I wonder how support and resistace works in indexes. As index value is calculated from underlyinhg stocks

 

[Secatu]

Yea, it's pretty simple. You support something or you resist it.

 

[margin_gamble]

hi folks I wonder how support and resistace works in indexes. As index value is calculated from underlyinhg stocks

The same way. Treat an Index like a Daddy Stock

 

[Girija]

The fact that underlying value is used to compute index is not a factor on support resistance. Index will move with largest contributors from underlying. It (indx value) is not exactly matching underlying at all instants as arbitrage can happen.

 

[earth_imperator]

hi folks I wonder how support and resistace works in indexes. As index value is calculated from underlyinhg stocks

Forget the underlyings and concentrate only on the data of the index.
It's a time series. Read on Pivot point(s).
But, IMO don't use too much T/A.

 

[ranjan]

The fact that underlying value is used to compute index is not a factor on support resistance. Index will move with largest contributors from underlying. It (indx value) is not exactly matching underlying at all instants as arbitrage can happen.

i didn't get you exactly. for example I observe that when an index comes to support then at the same time constituent stock or number of constituent stocks also reach at support and then the support is defended in the index. this stuff blows my mind. also sectoral indexes support and resistance are also respected. how is this possible?

 

[Girija]

i didn't get you exactly. for example I observe that when an index comes to support then at the same time constituent stock or number of constituent stocks also reach at support and then the support is defended in the index. this stuff blows my mind. also sectoral indexes support and resistance are also respected. how is this possible?

Think of it that they trade independent of each other. You are assuming something incorrectly. Not all stocks move in same direction to their index.

 

[tradersmantra]

Support and resistance works on every stock or index which exists on chart .

 

[ranjan]

Support and resistance works on every stock or index which exists on chart .

man i know it works. but want to know why it should work on sectoral indexes or general indexes

 

[ranjan]

Think of it that they trade independent of each other. You are assuming something incorrectly. Not all stocks move in same direction to their index.

why should i think that they trade independently? the indices value like nifty50 comes from its constituent 50 stocks. so how are resistance and support working on the index?