Support and Resistance
Support and resistance explained as price zones, the volume-based view, and a hypothetical Company A example in RM for Bursa readers. Education only.
What is Support and Resistance?
Support is a price zone where buying has repeatedly stepped in to halt a decline, and resistance is a zone where selling has repeatedly capped a rise. There is no formula. Analysts identify these zones from past swing points and, in a volume-based view, from price levels where heavy volume traded. Neither zone is guaranteed to hold.
How it is calculated
No formula exists. Analysts find past swing highs and lows where price reversed, and note prices where many reversals cluster. In the volume-based view, they look for levels where heavy trading occurred. Broken resistance is sometimes said to become support, a convention rather than a rule.
How Malaysian investors use it
Investors on Bursa use past swing zones to describe where a stock has paused before. On thinly traded ACE Market stocks, one heavy-volume day can create a level that reflects only a few trades.
Worked example: Company A (hypothetical)
Hypothetical figures for Company A, which reversed near RM 1.80 and RM 1.90 in past months:
| Zone (RM) | Days touching zone | Shares traded |
|---|---|---|
| 1.78 to 1.82 | 4 | 3.2 million |
| 1.88 to 1.92 | 3 | 0.9 million |
At RM 1.80, 3.2 million shares is about RM 5.8 million of traded value. The lower zone, with more touches and heavier volume, is the stronger support candidate here.
Common mistakes
- Drawing one exact line. Support and resistance are zones, not single prices.
- Expecting a bounce because a level held before. Past reversals describe the past.
- Ignoring volume, when a level with few trades can look important on the chart.
Related terms
- Volume – shows how many shares traded in each price zone.
- Fibonacci retracement – reference levels sometimes compared with support and resistance.
- End-of-day data – why these zones use closing and session data.
Where Finworld shows it
The volume analysis includes a volume-based support and resistance view, alongside volume flow and morning and afternoon session views.
Frequently asked questions
Must support always hold?
No. A break below support does not guarantee further falls, and a level that holds once may fail later.
What is a volume-based support level?
It is a price zone where heavy trading took place in the past. It describes history, not a forecast.
Do these levels work the same on every stock?
No. Thinly traded counters can produce levels based on only a few trades, so check volume first.
See how this fits into Finworld Software, or book a demo.
Finworld provides market education and research tools only. This is not investment advice. Market data is end-of-day.
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