What's up, Everyone? All right? So in this episode, I'm going to walk you through how to visualize support and resistance on stock charts. This is part of a multi-part series on technical analysis and how to read candlestick charts, especially for day trading. I'm going to teach you in this episode about horizontal and ascending and descending support and resistance. trendlines.

Now, it's important before we get started for you to understand that trend lines are only valid because so many traders use them. It's a self-fulfilling prophecy, just like traffic lights only work because people use them. These supporter resistance levels I'm going to show you become obvious buy or sell signals because thousands or millions of traders all around the world are respecting this language. So it's important that you learn this language.

Otherwise, you could be the guy that's blowing right through a red light. You don't realize there's a very clear sell signal and you're just buying anyways because you don't understand the language yet. So let's jump into the charts. We're going to start by talking about horizontal resistance.

This is an example right here of a stock chart where we have very clear horizontal resistance at 2.65 cents that's formed by two double top candles. They both hit that same level and if it had happened just once, we probably wouldn't have taken it too seriously. But because we have a double top at that level, that is very clear horizontal resistance. So on this particular stock, if we were looking at it today at 1.94 we would have to say, you know what it's gonna have upside resistance at two dollars and sixty-five cents, that's a possible problem.

Now this isn't to mention the fact that you can see this moving average in red coming down right here. That's also a form of resistance, but that's not the same as a trend line formed level of resistance. This is formed by a horizontal trend line right here, which is created by these two double tops. Now, regardless of what trading a charting platform you use, pretty much all charting platforms give you the opportunity to draw trend lines.

You can usually change the colors of them. You can kind of change the way they look, and usually when you click on your chart you can draw the trend line. It'll snap In this case, to the low of that candle which was twenty dollars at 420 and 76 cents. All right.

So let me back out of this here. So now let's look at uh, horizontal support. So in this example here, this is a stock that is really based out at this level of a dollar 63.. So if I was and this is actually uh, isn't this the same? Yeah, this is the same chart.

So right here, same stock. Uh, we're watching a dollar. Sixty-three has possible support right down here. Yes, we do have this resistance on the upside.

so this is our resistance level up at 265 and down here is our support level at 1.63 The support level would be more valid if it had been tested multiple times. A support level. In this case, it's been tested really four days in a row takes a little bit more of the form of a flat bottom. That's valid.

It's clearly support, but it's not formed over the period of months or or years, so it may not have the same level of validity as a different trend line. You always have to ask yourself, is this a trend line that thousands, likely thousands of other traders have drawn And if it is, it's probably going to be well respected. If it's a little bit more obscure or a very short time frame, it may not be as well respected. So this is a very simple, uh, horizontal support line.

And what we want to look at now are the combination of ascending and descending support and resistance trend lines. So uh, let me show you this example First, this is another horizontal trend line right here. This is going to be right at a double top of 750 and very common that we see these Uh levels of resistance correspond with half dollars and whole dollars. So we've got the half dollar and the whole dollar right there.

That's very common. Let's look at this example here. This is another example of 650. another horizontal resistance level.

This is intraday, so it's a very short time frame, but certainly valid. This right here is a little bit of a longer level. You can see that we had a bit of resistance at 888 earlier on this stock and then it comes back up and look at that right into that level, again, comes back up right into that level again and then the fourth time. Here is where it breaks through.

It does attempt to break here, but is not able to hold that level, which is then considered a false breakout. And one of the things that we've talked about as well is that if you miss the breakout, you can certainly watch one minute micro pullbacks. But in this case even on the five minute, it comes back and retests the previous level. So what initially was resistance then gets broken and when it comes back down, it's tested to see whether or not this level is going to become support.

I've got some really good examples of this when we're looking at horizontal, sorry, ascending, descending, resistance and support trend lines. Now, in contrast to horizontal support and resistance lines, the ascending and descending support and resistance lines can be a little bit more obscure. These are a bit more challenging to draw. Horizontal is usually pretty obvious.

There's flat bottoms or flat tops. It's very clear that this is an obvious level on a chart that the stock has tested and been unable to break multiple times. And it's obvious because it's been at the same price. When it comes to ascending and descending, This, for a lot of traders, is not as clear and you could Two different people could draw a trendline.

And because of the way the lines connect and then therefore extend the trend line forward, it can very radically change where it ends up down the road. So ascending and descending are a bit more difficult. And let's jump in back into the charts and look at some examples. So here we have this example where I drew the first line right here.

I connected it here and I connected it here. So I connected it in these two places. And then the way I had my line set was to extend forward and you can change that in the settings when you're drawing trend lines. If you go, let's see, it depends on the software you're using, But if you go in here, let's see you change this or I think you can double click this line right and then you can change this to extend forward so you could extend it left.

You could extend it right or you could go infinite which extends it both ways. which is how I have it set right now. So uh, back here. On this example, I had it set just to extend to the right and so at these two connections, it continued to extend the line forward and note, look at this.

I drew these trend lines right here at this time in the morning 9 A.m and now look what happens at 9 30, the stock drops down and comes right to the support of that trend line. So now because I have my lens turned on and I'm seeing and visualizing this ascending, it's ascending because the support levels coming up this ascending support trend line. I recognize this as a dip opportunity off of sending support. Now, this may not be one of the patterns that we've talked about so far in this technical analysis series.

This is a bit of a this. This really is an entry off of support That's not a bull flag, that's not a flat top breakout. It's not an Abcd pattern. It's an entry off of support.

It's a little riskier because support can be interpreted differently, but in this case an entry off support that then leads to a red to green move. So back to the chart. Here it ends up popping up to 345 and coming back down and testing this level again. It comes back up, comes back up, comes back down, and then finally it breaks through and that high volume on the brake.

That is confirmation that many other traders drew this trend line in the exact same way. Now, look, when it comes back up, it tries to get back to it and it can't break. It tries again. It can't break.

Now is it possible that someone else connected the trend line maybe from here and connected it to the low of this candle here? Because if they had, you would notice that the trend line would come just a little bit lower right in this area And that's possible. It's certainly possible. It's also possible someone else drew it a little bit higher. Connecting it depends on where you connect it.

If you connect, certainly here. that's your starting point. But whether you connect to this lowest green candle or you connect to this red candle or you connect it to the green candle in the middle would be different. The way I always do it is I connect the lows first and I and that's what I do is by default.

Now if I do that and I realize, well, it doesn't seem like it's perfectly lining up, then maybe I'll test a different level. Like connecting it right here. and ultimately, the level that you want to use is the level that is the most valid and validity means it's been tested many times and is clearly showing that it's holding. Let me show you on the 9 10 year time frame.

So this is big. This is a 10. This is going to be a trend line that has been valid for over 10 years. Okay, this is this yellow line right here and this is on the S P 500.

Okay, so let's go back here and it doesn't mean it's never been tested or never tried to break. But look at this. So we've got I connected right here. These two tops.

I connect these two tops and I pull that forward and you can see right in here. Maybe somewhat valid. Right in here. It broke back below, it came back above it.

But let's go back the other direction. Whoa. This is like been riding underneath that trend line. This was for years.

Right here. It tried to get above it, but it couldn't Right here, it broke below it. It tried to get above it, but it couldn't and it stayed below that trend line literally for years. I mean, this is really, this becomes very well defined.

Let's go back even further. All right. So this is now going back to 2009. Right here.

So in this area, you can see that we were below it right there. We almost tapped it and then we came back up. came back down towards it. Now it's not perfect, but it starts to get really dialed in in that area.

Now someone else might draw this trend line a little differently. They might say I'm going to draw it from. Let's see, hang on. one second.

I gotta take off my my drawing tool interferes with my, um, my charts. All right. So someone else might have drawn this trendline a little differently. They might have drawn it.

Maybe you know, maybe something like that initially. And initially at that time, that may have seemed fairly valid. Because you've got that test. You've got this test here.

But then as you apply that line forward, how does it change? Look at how close together they stay. I mean, over the course of years, right? So it's like, wow, those those lines are almost. They're like parallel. I mean, they're moving, they're ascending, But they stay that close together.

Because just just for context, if we adjust one of these even slightly, we adjust this one to up here look at how fast it moves and changes going ahead in the future, right? So trend lines are valid. Ultimately, when they've been tested many times and it continued to show that traders are respecting them. If traders don't respect it and it breaks through the level and it's as if the level wasn't even there, then you know clearly that's not as significant as we may have thought initially. So let's jump back here to another example.

This has both a descending resistance and ascending support. So the resistance is up here from here to here. Again, you could have drawn it from here to there, but it seemed more valid with the trend line the way it held right here. So that's the level that's drawn and this is the This is the ultimate proof here that this was valid.

Tests sells up, sells off, low, comes back up, can't break, You can then connect those dots, tries again, comes back up, finally breaks, comes back down and is now testing as support. When a level is resistance and then turns into support, that's one of your ultimate confirmations that you drew the level correctly, and so you can have that both on a horizontal level and ascending or descending. All right. So here's another example.

This is a very clear ascending support trendline. and in this instance, when you have a trend line like this that you can connect, you can start gaining confidence to buy dips here and buy dips here because you know you know that you're buying off of this ascending support trend line. This might give you the opportunity to take an early dip to anticipate, perhaps a first five minute candle to make a new high. The break out of a bull flag, the break out of an Abcd pattern.

It's always great when you can get an early entry, and when you can base that entry off a strong level of support whether it's horizontal, ascending, or descending, or it's even the support of a critical moving average like the volume weighted average price, or the 200 or the 20 or the nine depending on what time frame you're trading on. Here's another example where we have ascending support tested once, tested twice, and it comes down a third time comes down the fourth time. It feels like it might be getting ready to break with that higher volume, and certainly that would be something we'd be watching closely. This is an example where you have a very clear level of support.

Now this is on actually a very short time frame of a 10 second chart. but it's holding holding holding holding holding holding and then uh oh, there it goes. So this is a level where you would be watching this really closely, not get caught in that flush. Or if you're interested in going short, you can be looking to short as it starts to break down as it continues to test and test and test.

Eventually you may start to look for an actual breakdown. Now I want to remind you guys that ascending trend lines, descending trend lines, Horizontal trend lines. These are just ways to help interpret what could be psychological resistance or support on a stock. This has both ascending support right there, descending resistance.

It finally breaks out and then it's off to the races. Now, even if you didn't have this trend line drawn here, you still would have been able to visualize the stock breaking back over the critical level of the volume weight, average price, breaking back through the high of this pivot and then coming up through the high of day and then forming a first pullback, a second pullback, and even a third pullback as it rallies over a hundred percent from six dollars up to 12 after hours. So for those of you that want to learn more about strategy, I encourage you to check out down in the description below a link to download my micro pullback Pdf. In that micro pullback, uh Pdf, I talk about strategy because again, ascending support, horizontal support, descending resistance.

That's not strategy, that's just where to visualize support and resistance. The strategy comes from your decision of what type of stocks to look for, these levels, on what time of day you're going to be trading them, what price range you're trading, what float, what type of catalyst you prefer. That's when you start to dial in the rules of how you trade. I'll happily share the rules that I use for how I trade the markets.

It's no guarantee that you'll find success, but it sure makes sense. I think to learn from someone who's actually in the weeds doing this every single day. And I am. I'm a real trader with real money every single day.

So let's jump back over to our charts here and look at a couple more examples. This is a very well established ascending support trend line. and so because we would have been able to connect it, let's see, looks like it's connected, I can't tell exactly where the two connections are. Sometimes you can draw where you're actually snapping to a low of a candle, so you're connecting two candles and other times you're just sort of applying a line across the chart.

It is better if you can connect two candles. In this case, where this came down here could have presented a dip opportunity as this was clearly a support line that had been formed from the pullbacks earlier. This, however, a little bit of descending resistance and that can be a real problem when you're looking at potential breakouts. This is another great example of a stock that a previous support trend line here tests once twice.

Three times it breaks becomes resistance, it surges through it, it gets back below, it tries to come back up. and right here. resistance tries to come back up, even the next day. And right there is resistance.

So if you were someone who was buying this right at Nine Dollars and you didn't realize that we had that ascending resistance trend line. In the way you're blowing through a red light and you get into a car accident, you're not seeing the signals that are right there telling you that this is a problem. So again, that's why it's so helpful to be trading, especially with the community of other traders that can help tell you, hey, wait a second. We've got resistance on this at Nine Dollars because one person can't necessarily remember all of these levels all at the same time and sometimes you might just not have one drawn.

So being able to have someone say hey, wait a second. Guys, did no one see ascending resistance at Nine Dollars? You snapped the chart. You're like thank you. You're right.

We do have a problem there, so as always you could tune into the morning show where I'm streaming in the mornings and trading live where I'm giving my market commentary. And it also benefits me because I look for you guys to call out these levels and say, hey Ross In case you didn't already see it, we've got resistance on the daily resistance on, you know, the five minute whatever it is, because sometimes these trades are so quick or a stock will pop up with breaking news so fast that you need as many eyes on it as possible to sort of be doing this analysis and figuring out. Okay, where are the support resistance levels on this particular stock? All right. So back to the charts.

So here's another one where this was on the Airbnb ipo, initially ascending support. I usually don't like to draw really steep trend lines like this because they never hold for very long. They do break, but then it sells off here and comes back down here. And now I'm thinking, okay, we've got a a descending support line and then we come down here.

We bounce off of it right and then we start to flat line a little bit. so the break of this level was certainly significant. and then the ability to draw this level right here created a possible dip trade here. Although as you can tell, it didn't really bounce all that much.

but still a valid level. This is a little bit of a busier chart. We've got four time frames here. one minute, five minute daily and ten second.

We've got some horizontal levels down here. horizontal levels here, horizontal level here, and horizontal level right here. And we also have this ascending level here. This was support, but then right here.

If you were buying this thinking, okay guys, re-tested the high. Here's the thing. You do have a window. We would call this a window or a gap with no resistance until 50.

sorry 49.50 the low of this candle because this dropped and it gapped all the way to here. This was a big gap that was formed but the gap is slowly filled up to about here. So now you have this gap from you know, about 40. I don't know.

46 47 up to 49. But what we have blocking the way is this ascending resistance line. So again, if you didn't see that, you might have bought right into this level and on a high priced stock like this and it flushes back down. That could be a really nasty loss.

So it's really important to be watching for those ascending and descending support and resistance trend lines. This is just a close-up of that one-minute chart. And this is another example here where you've got ascending support holding and then finally breaking and in this case results in a halt going down which is never something you want to get caught in. So if you're able to see, this is ascending support.

If it breaks that level, I don't want to still be holding. That gives you the opportunity to exit early before it snaps. Now, if you're particularly bullish, you could be watching to buy off of support levels, but certainly if you bought for a what you thought was a support level and you expected to hold, you would also level breaks. so there are more examples of trend lines than you could possibly show.

Ultimately, what you want to do is you want to just start practicing drawing trend lines and it's really satisfying when you connect two trend lines and then look forward or look back and realize whoa, Oh my gosh, it's it's like you just applied this lens and now you see how the price was trading above it, above it, then broke below it tried to get back above it and it couldn't and and now you are empowering yourself with the ability to visualize these very critical levels on a chart, support, and resistance through horizontal, horizontal, and ascending and descending lines. This is so critical, so you want to layer this into what you already know on individual candlestick formations, multi-candlestick patterns. And now we're going to talk about getting into the drawing of horizontal, ascending, descending lines. and then the next level is looking at gaps and windows on the chart.

I already gave you a little hint at the gap in the window that we saw on that one stock, because that's where you realize you have these big open areas with no resistance, no support. and when a stock gets into those levels, they can move really quick. So if you want to keep learning, keep watching the next episode in this multi-part series on technical analysis and learning how to read stock charts for day trading.