Introduction:
Do you know the law of supply and demand? When the quantity of pandesal is few and the buyers are plenty, the price of pandesal normally goes up. On the other hand, when the supply of pandesal are plenty and the buyers are few, the tendency is for the price to go down. In the Philippine stock market, prices are driven by investors and traders that makes the stock market go down or up. When there are many buyers, the stock market go up and with few buyers, the stock market go down. When buyers are plenty and the supply is plenty also, prices move sideways.
When I am checking the charts in Citiseconline, most often than not, I am scratching my head on what the hell these charts are all about. Then when I go to technical analysis, I am always confused. I did some research in our neighbourhood about it and came up with below information.
Support is the price level at which buyers are plenty enough to prevent the price from declining further. Look at the chart of Boy Ayson bakery, when its pandesal price reaches 60 pesos, it is always going up! Hanggang doon na lang ang ibababa ng presyo niya! The logic dictates that as the price declines towards support and gets cheaper, buyers become more inclined to buy. By the time the price reaches the support level, it is believed that buyers will overcome supply and prevent the price from falling further.
Support does not always hold and in the case of Boy Ayson bakery, the price can go down below 60 pesos per pandesal. If the price of pandesal goes down below 60, it indicates that buyers of pandesal are very few and Boy Ayson bakery is now willing to sell its pandesal even at a low price below 60. Once support is broken, another support level will have to be established at a lower level which perhaps may be 50 per pandesal.
Resistance is the price level at which selling is thought to be strong enough to prevent the price from rising further. Look at the chart of Boy Ayson bakery, when the pandesal price reaches 75, it goes down. Hanggang doon na lang ang itataas ng presyo niya! The logic dictates that as the price advances towards resistance, buyers become less inclined to buy. By the time the price reaches the resistance level, it is believed that pandesal supply will be more than the buyers and prevent the price from rising above resistance.
Resistance does not always hold and in the case of Boy Ayson bakery, the price can go up above 75 per pandesal. If the price go up above 75 per pandesal, it means that buyers are willing to buy more pandesal evenbthough the supply is few. It indicate buyers have increased their expectations and are willing to buy at even higher prices. Once resistance is broken, another resistance level will have to be established at a higher level which is perhaps at 80 per pandesal.
Do you know the law of supply and demand? When the quantity of pandesal is few and the buyers are plenty, the price of pandesal normally goes up. On the other hand, when the supply of pandesal are plenty and the buyers are few, the tendency is for the price to go down. In the Philippine stock market, prices are driven by investors and traders that makes the stock market go down or up. When there are many buyers, the stock market go up and with few buyers, the stock market go down. When buyers are plenty and the supply is plenty also, prices move sideways.
When I am checking the charts in Citiseconline, most often than not, I am scratching my head on what the hell these charts are all about. Then when I go to technical analysis, I am always confused. I did some research in our neighbourhood about it and came up with below information.
What Is Support?
Support does not always hold and in the case of Boy Ayson bakery, the price can go down below 60 pesos per pandesal. If the price of pandesal goes down below 60, it indicates that buyers of pandesal are very few and Boy Ayson bakery is now willing to sell its pandesal even at a low price below 60. Once support is broken, another support level will have to be established at a lower level which perhaps may be 50 per pandesal.
What Is Resistance?
Resistance does not always hold and in the case of Boy Ayson bakery, the price can go up above 75 per pandesal. If the price go up above 75 per pandesal, it means that buyers are willing to buy more pandesal evenbthough the supply is few. It indicate buyers have increased their expectations and are willing to buy at even higher prices. Once resistance is broken, another resistance level will have to be established at a higher level which is perhaps at 80 per pandesal.
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