The recent price action of Energy Conversion Devices (ENER) offers a great example of simple support and resistance. Support and Resistance is a basic form of technical analysis that can be used in a variety of different circumstances to provide investors an easy way to predict stock movement.
We can refer to the six month daily stock chart below of Energy Conversion Devices (ENER) as our example:
1. Points one give us a first glimpse into the resistance ENER saw around $35 a share. As we can see once the original high was made it took two more pushes to break through, which lead to a large stock price gap and new highs for the stock.
2. Points two offer another more recent example of ENER at technical resistance. This time it was at $73 a share and the third push was the one to claim higher highs.
3. Points three show us the support ENER has received while forming its latest base. This would also be called a support trendline. A common trend is for resistance to turn into support, which we can see with the first “3″ on the left. The $60 resistance once broken then became support.
4. Point four highlighted in purple shows us the next area the stock will most likely find resistance. Climbing above $83 a share would not represent higher highs but also new 52-week and all-time price highs.
- Example 5, Symmetrical Triangle Example, Visa (V)
- Example 4, Symmetrical Triangle Example, Google (GOOG)
- Example 3, Descending Channel Example, First Solar (FSLR)
- Example 2, Covance (CVD) Stock Example, Support and Resistance
- Example 1, Energy Conversion Devices (ENER) <– Currently Viewing
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