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Seedly PFF 2019

Asked by Anonymous

Updated on 18 Apr 2019

How do you know when is a low of the company share price at the top or bottom of the rising trend? (Should we predict using future trends or look at historical trends?

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Yeo Enk Loui
Yeo Enk Loui,
Level 6. Master
Answered on 04 Mar 2019

Hello there,

Just want to use the simple idea of "support" and "resistance" as well as a simple illustration to answer your question!

Lets look at the share price of Exelixis Inc. (EXEL), listed on the NASDAQ as an example:

In layman term, think of a stock price movement like the motion of breathing. One has to inhale, take a deep breath; exhale, removing the air in your system before inhaling again. In a sense, that can be said for stock price movement as well! They have to increase gradually, decrease slightly, and increasing again - in short, the long term stock price rises as the price makes higher highs, and higher lows - as seen in the diagram above.

One easy way (not exclusive or by no means is this completely true) is to draw a "trendline", to roughly determine where the next lowest point, or highest point will be at. If you are bullish on this stock, your goal is to enter/buy this stock when it is at its 'new low' ie: I should buy EXEL on 10th Nov and 24th Dec

This is just a general guide but i hope this helps in helping you get a rough sense of how you know when is a high/low of the company share price.

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For TA, we look at past prices in an attempt to "predict" future price movements.

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