The primary gospel of technical analysis is trend and trend reversal. Support and resistance are two of the tools technical analysts use to determine if trend will reverse or continue .

Support is defined as an area of accumulation on the stock market charts where price stops falling because investors have started purchasing shares.

Resistance is an area on the stock market graph where price ceases to move higher and falls back. This is due to investors making the decision that price is simply too high at the present time or that it is simply time to take profits.

The stock market indicators of  support and resistance are driven by fear and greed. Those who are day trading online understand that while there may be many reasons for purchasing and holding a stock, the overall market movement is based on human psychology.  With that in mind, styles of trading such as day trading, swing trading and momentum trading all utilize support and resistance analysis for potential market gain.

There are 3 Special Tactics to using support and resistance.

Tactic #1: Locate a strong area for support or resistance.

Traders who are day trading stocks should look for the number of times that a support or resistance line has been tested. For example, if a stock has been at $50 eight times in the past six weeks and has also been at $38 three times during the same time frame, the stronger line is at the $50 price. Simply stated, the more times a support or resistance area holds price, the stronger the area is believed to be.

 Tactic #2: Support and resistance can be horizontal or diagonal on the stock market chart

Traders may easily see horizontal lines of support and resistance, but they should also know that identifying a diagonal trend helps to forecast upward or downward movements of the stock. For example, the price might fluctuate daily, but if over an eight week period the price moves from $40 to $41 to $43 to $44 to $45 and so forth, traders are able to see a very apparent upward trend in stock price.

Tactic #3:  Screen for broken support or resistance

If the stock prices falls below or climbs above the support or resistance line, the trend of the stock has changed. The stock might become bear, bull or neutral and day traders may need to rely on other indicators that are part of their day trading strategy to determine what action to take concerning the stock. A quick tip to help you identify if a trend change has occurred is by looking at the amount of the price difference between the support or resistance price and closing price. If the closing has at least a three to five percent difference from the support or resistance price, then most likely the line has been broken.