support and resistance

Discussion in 'Trading' started by ranjan, Aug 5, 2022 at 9:12 AM.

  1. ranjan

    ranjan

    hi folks I wonder how support and resistace works in indexes. As index value is calculated from underlyinhg stocks
     
  2. Secatu

    Secatu

    Yea, it's pretty simple. You support something or you resist it.
     
    earth_imperator likes this.

  3. The same way. Treat an Index like a Daddy Stock
     
  4. Girija

    Girija

    The fact that underlying value is used to compute index is not a factor on support resistance. Index will move with largest contributors from underlying. It (indx value) is not exactly matching underlying at all instants as arbitrage can happen.
     
  5. Forget the underlyings and concentrate only on the data of the index.
    It's a time series. Read on Pivot point(s).
    But, IMO don't use too much T/A.
     
    Last edited: Aug 5, 2022 at 12:28 PM
  6. ranjan

    ranjan

    i didn't get you exactly. for example I observe that when an index comes to support then at the same time constituent stock or number of constituent stocks also reach at support and then the support is defended in the index. this stuff blows my mind. also sectoral indexes support and resistance are also respected. how is this possible?
     
  7. Girija

    Girija

    Think of it that they trade independent of each other. You are assuming something incorrectly. Not all stocks move in same direction to their index.
     
  8. Support and resistance works on every stock or index which exists on chart .
     
  9. ranjan

    ranjan

    man i know it works. but want to know why it should work on sectoral indexes or general indexes
     
  10. ranjan

    ranjan

    why should i think that they trade independently? the indices value like nifty50 comes from its constituent 50 stocks. so how are resistance and support working on the index?