Please not that all our charts are opened in another window, so ensure that you haven't got Pop-Ups blocked.
This is best demonstated using a chart example.
As you can see from the chart of the US$ vs Swiss Franc, the dollar has 'bounced' on numerous occasions from the 1.4350 level and this is confirmation that the stock is well 'supported' at this level. If we now draw a line, linking the points where the $/CHF has traded at 1.4350, we can construct a 'support' line.
This is the opposite of support and indicates where the market/stock has 'stalled' in the past. Looking at the price history of Vodafone on the chart, we can see that the stock has 'failed' several times at the 111 level and as a result, the line drawn linking these points provides a 'resistance' level.
Once we have recognised and constructed these support/resistance ines we can then go on to use them in our trading strategies to enter or exit positions or to control our risk through the use of stops. The methods we employ to do this are covered in more depth in the regular seminars we run for traders interested in broadening their knowledge base and improving their investing.