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If I could only learn one aspect of chart reading it would be knowing how to read support and resistance lines. Support is when a stock price gets buyers to start buying and/or sellers to quit selling. Resistance is just the opposite – where sellers start selling and buyers quit buying. So how do I identify where these price levels actually are so I know which stocks to buy now and the appropriate time to sell them? Well, there are actually a number of fairly reliable methods to find accurate support and resistance lines:

History

The first place I go to find support and resistance lines is by simply looking at the charts. Are there any prices where the stock price kept “bouncing” off of? If it happens multiple times in a relatively short period relative to your chart time frame then you have a support line. This is where the double bottom or double top price formations come from. If a stock can’t break through the resistance it’s going to change directions and try to break support in the other direction.

Price Trend

You’ve likely noticed that for any good stocks to watch, the prices never move in a straight line regardless if they are going up, down, or sideways. If a stock is moving up it first moves up, then comes back down some, and then moves up higher. This is called creating a channel. If you draw a line along the lows of the stock prices and the highs of the stock price in this trend channel you get more support and resistance lines. As long as the price doesn’t break out of the channel it’s likely going to keep heading in the same direction.

Moving Averages

I am probably too big a fan of moving averages. I enjoy fine tuning the number based on different theories or stock to stock to try to see what each given security seems to react to. A moving average is simply an average price over a given period of time. The most commonly used are the 50 day and 200 day moving averages for longer term trading. When a price hits a longer term moving average it tends to stall regardless if it’s moving up or down.

Fibonacci Numbers

The Fibonacci series, the last two numbers in a sequence added together, is found in nature, science, and price cycles. Essentially it goes 1,2,3,5,8,13,21, and so on. When you divide these numbers you get the same percentages and they are found in stock cycles. The price will often retract 38.2%, 50%, or 61.8% If you draw these lines of resistance off a price reversal you can add some clarity with the other methods.

The most common counter argument relates to the one-size-fits-all implication of the European Central Bank, with its single interest rate and change rate.

The fact that countries are at different phases in the economic cycle means that some may need high interest rates at the same time that others need lower ones. Other countries, on the other hand, might wish to stimulate the economy to increase growth.

One response to this would be to change the fiscal policy. However, this is limited by the Stability and Growth Pact. If a country is in recession, but interest rates are going up in the European Monetary Union because others are in a boom, it could normally stimulate the economy by lower taxes and high government spending-but no longer have the right to do this except within defined limits. Those in recession when interest rates are high may find that unemployment rises to socially acceptable levels. One result of all this is that the Stability and Growth Pact is coming under immense strain.

On unemployment, it was found that the average difference between the rates in the 12 countries in the euro zone average was 3% higher than in 1990. France and Germany had unemployment rate of 9% and 10%, yet the Netherlands, Ireland and Portugal had rates between 2% and 5%.

On inflation, there has been more convergence. In the early 90s, the average difference between member rates in the euro zone average was 2.5%, and in the early 2000, it was down to 1%. However, Germany and Belgium have inflation rates, around 1%, while Ireland, Greece, Portugal and The Netherlands have rates around 4%.

Although the whole euro zone has the same interest rate, there is still the question of real enters rates due to varying inflation. In the late 90s, all countries except Greece and Portugal had much the same real interest rates. In early 2002, however, Greece, Ireland, Portugal and The Netherlands actually had negative real interest rates. These countries need higher nominal rates to combat inflation, but of course, can’t have one. Low inflation countries, like Germany and Belgium, have the highest real interest rates due to low inflation, but would like lower nominal rates to stimulate the economy.

If you liked this financial topic then you may be interested in learning about forex scalping and forex training.

Share trading is a dream for many people. People who want to play big or the people who wish to play big, but afraid of the roadblocks in it, for them the share trading is like gambling with your fortune. If we go deep into the trends in the share trading, we will find that many people predict the market status very correctly and gain a lot of money through it. Share market can’t be cheated, there are few cases where we can find some fraud companies who have done that but most of the time it have been the fraud less business. In this article we will be discussing the situations and the tips for the small players in the market.

Few tips for the small players:

Small players are the big part of the market and many get on streets because of the small wrong decisions, this can be avoided with little care and proper strategy. Imply the following strategies for playing risky;

1.    Always keep your head cool and keep yourself far away from the intraday. I know intraday are very effective and can make a lot of difference in earnings but the addictiveness of it will make you lose everything you have and that’s not a good option at all.

 

2.    Never do short sells of the stocks. Don’t play with anything that you don’t own. If you try this you may get into lots of troubles and may go bankrupt.

 

3.        Study the market properly; knowing about what you are buying is always a best thing to do.

Fear is the wrong thing people posses, I would say that go ahead and read the blog on investing in Indian share market to learn about the overseas share trading. It will help you a lot if you want to play risky but with less money.