What is the primary purpose of support and resistance (S&R) levels in technical analysis?

To predict future market trends with certainty To identify potential price points where buying or selling pressure may increase To guarantee profitable trades To eliminate market risk

How can a trader utilize resistance levels when entering a long trade?

As a guaranteed entry point for maximum profit As a signal to short the stock As a potential target price for exiting the trade As a stop-loss level to limit potential losses

What is the relationship between support levels and buying pressure?

Support levels indicate areas of high selling pressure Support levels have no correlation with buying or selling pressure Support levels suggest potential buying interest, which can drive prices up Support levels are irrelevant for short trades

Describe the process of identifying support and resistance levels on a price chart.

Use complex algorithms and software to automatically detect S&R levels Rely on intuition and guesswork to estimate S&R zones Look for price points where the stock has historically reversed or stalled, and connect them with horizontal lines Focus solely on recent price movements to determine S&R

How does the concept of a 'checklist' contribute to effective trading?

It guarantees profitable trades by eliminating all risks It provides a structured approach to trade selection and promotes discipline It replaces the need for technical analysis and fundamental research It predicts market movements with 100% accuracy