Weekend Market School

Today's Lesson: Support and resistance levels

Hello! Welcome to the weekend stock market school. I am your AI instructor on this site; today we will learn the most fundamental pillar of technical analysis, namely support and resistance levels . Grab your coffee, let's get started.

1. What is it?

Let's start with a simple analogy: think of a room. The floor won't let you fall down, the ceiling won't let you go up. On a chart, price also lives in such a room:

• Support: The floor zone where price stops or turns while moving down. Buyers concentrate here.

• Resistance: The area where the price stalls or reverses while moving up is the ceiling region. Sellers step in here.

Clear definition: Support and resistance are price zones where the price has reacted at least a few times in the past. Note: it is a zone, not a point we think.

2. Why is it important?

These two concepts give you three things:

1. Risk management: If you place a stop just below the support, you limit your loss from the start.
2. Entry/exit plan: Buying at support and taking profit at resistance offers a sensible framework.
3. Breakout logic: When levels are broken, a new era begins. Moreover, a broken resistance often turns into new support . This is called a "role reversal."

3. How to Read / Use?

Let's take it step by step:

1. Find reaction points: Mark areas on the chart where price stopped or reversed at least twice.
2. Draw a zone, not a line: Price can deviate by 1-2 points; that is normal. Think of a wide band.
3. Read the channel position: In our reports, the " channel %" value shows where the price is within the trading channel: 0% it is leaning on support, 100% it is pressed against resistance. Around 50% means the price is in the middle of the channel.
4. Check the channel's orderliness (r value): " r" shows how regularly the channel works. Positive and high values (such as 0.70 and above) indicate the channel operates in a disciplined manner; values below zero signal that the channel is irregular .
5. Wait for confirmation on a breakout: A level is not broken on a single candle; if it breaks with a daily close , its reliability increases.

4. Real Example

Let's get to practice with today's data:

• VAKBN: Channel at 32%, meaning the price is close to support but has not held yet. A high value like r=0.76 shows the channel works consistently, so the support zone is worth watching.

• SAHOL: Channel at -2%! Below zero means the price has dipped below support . Hold your position: No rush here, waiting for a closing confirmation is the first rule in the guide.

• TRMET: Channel at 52%, the price is right in the middle. It is leaning on neither support nor resistance; it is looking for direction.

• TRALT: +% It has come up from the lower zone of the channel at 3.93. But r=-0.22: The channel is irregular. Levels work more weakly here; it is important to see this difference.

5. Common Mistakes

• Point hunting: Calling a level invalid just because the price did not touch exactly 100.00 TL. Remember: think in zones.

• Chasing breakouts without confirmation: Jumping in saying "broken!" on an inside candle. Wait for the daily close.

• Line clutter: Drawing dozens of lines on the chart makes them all meaningless. Keep only zones that have produced clear reactions.

• Forgetting role reversal: Instead of deleting a broken level, keep tracking it with its new role (broken resistance = new support).

6. Mini Test

Question 1: What is a support level, and which players step in there?

Answer: It is the region where the price stops or reverses while moving down; buyers concentrate there.

Question 2: If a stock's channel % value is -2%, what does that mean? (Hint: think of the SAHOL example.)

Answer: It means the price has slipped below the support zone. This could be a breakout signal; however, confirmation by the daily close is expected.

Question 3: After a broken resistance level, what does it usually turn into?

Answer: It turns into a new support zone. This is called a role reversal.

7. Summary

• Support is the floor, resistance is the ceiling; both are considered as zones .

• Provides a framework for level-based risk management (stop) and entry/exit plans.

• The channel % tells the position of the price in the channel: 0% means close to support, 100% close to resistance.

• The r value shows the orderliness of the channel; positive and high values indicate a regular channel, negative values an irregular channel.

• At a breakdown, wait for closing confirmation; broken resistance can turn into new support.

Try marking the channel positions of the stocks on your own watch list once over the weekend. See you in the next lesson!

This lesson is for educational purposes, not investment advice.