I have seen these terms used and am wondering how much is actually a real thing vs finding patterns where there are none or that aren’t going to be predictive.
For instance from a recent article on Tesla:
“If the stock does not hold support around the $153 level, the upper bound of a consolidation range from October 2020, there is a risk of it dipping to the lower bound around $130.” https://www.google.com/amp/s/www.benzinga.com/amp/content/30088223
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Technical analysis (the mumbo jumbo about “support levels” and such) is essentially made up. Humans are *really* good at finding patterns in data, so much so that they tend to “find” patterns even when they don’t exist. All rigorous studies of stock movement show they’re all random walks around a slowly moving average, so “support levels” and “resistance levels” are basically after-the-fact data artifacts, not real.
HOWEVER…stock traders are people and people react to what they *think* is there, not what’s actually there. So if “everyone” believes there’s a resistance level at $153 then the stock will behave be like there is even if there’s absolutely nothing about the business to actually justify that.
So it’s real-ish, in the sense that astrology isn’t real but people who believe it will act as if it’s real, which can become a self-fulfilling prophecy.
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