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Lesson 1:	Part 3: Resistance Lines

Bearish Resistance Line. Exact opposite of the bullish support line. It serves as a guide for the downtrend of a stock. Has a habit of acting like a brick wall. Stocks will often rally right up to the bearish resistance line and then bounce off. To draw the resistance line, you must first have a sell signal from the top. Go to the highest column of X's and begin drawing a line down at a 45 degree angle or a 135 degree angle. Once a stock is well below the bearish resistance line, short term resistance lines can be drawn. The bearish resistance line must be violated and not just touched in order to turn the trend positive.

We typically prefer not to go long when below the Bearish Resistance Line. This line, like the Bullish Support Line, can be as strong as a brick wall. We say a stock is bearish when it is on a sell signal and below the Bearish Resistance Line. Be wary of buy signals that come from just below this resistance line as they tend to be false or best suited to traders. Stocks that are moving up to this line typically find formidable resistance there. Also, a stock must be on a buy signal to penetrate the Bearish Resistance Line. Short sales can be initiated in weak stocks when the underlying stock rallies up to the resistance line but is still below it. This is the optimum point to sell short on any of the bearish chart patterns.

Example of a long term Bullish Support Line.

Example of a long term Bearish Resistance Line: