Penny Stock Resistance and Support

Penny Stock Resistance
To find resistance you first have to look for stock prices that are higher then the current stock price. The sequence goes from most recent low to most recent high. For example, if my stock price I am looking at is at .22 currently and one week ago there was a high of .25 and a few days before that the high was .29 and three weeks ago there was a high of .25. The resistance for now would go as follows..... current price .22 resistance #1 .25 resistance #2 .29 *the .25 a few weeks back would no longer be resistance because after the .25 we had a .29 run which allowed anyone holding at .25 to sell at .29 for a profit. You see resistance is a simple concept, resistance = SUPPLY! Lets say somone got in the stock at .15 and it ran to .29 then dropped to .22 which the current examples price. Someone had to buy at .29 range, so we call that SUPPLY meaning the holders from .29 are going to say to themselves "If this stock ever goes back up to .29 i am SELLING!" So .29 will have plenty of "supply" meaning people selling shares at that price which means it will be more difficult to pass that range because everyone wants to sell. NOW when the BID goes HIGHER then .29 (meaning all those .29 sell orders are GONE and we now reach .30 bid) we look for the next previous high that is higher then .29! and the process goes on....


Penny Stock Support
Support is the reverse of resistance, support = DEMAND, where people want to BUY! So to find support we do the opposite of what we did for resistance. We look for any previous LOWS or moving average lines that are lower then the current price that will act as areas the price can bounce off of. The more a stock hits the same price the stronger the support or resistance is.
This article was written by a member at Penny Stocks, which is a large stock comunity. There are many investors there that talk about all the Penny Stocks and Penny Stocks.