How Can I Determine the Next Resistance Level or Target ...

One of the most common methods of setting a target price is achieved by first identifying a technical chart pattern. After the pattern is identified, ... TechnicalAnalysis TechnicalAnalysisBasicEducation TechnicalAnalysis GuidetoTechnicalAnalysis TechnicalAnalysisBasicEducation AdvancedTechnicalAnalysisConcepts Determiningwherethepriceofanassetwillstoponceithashitanewhighisoneofthemostdifficulttasksforanytrader.Thereisnomagicwaytodeterminewhatpriceanassetislikelytoreach,buttechnicaltradershavedevelopedanumberofmethodsthatcanatleastgiveyouafairlygoodestimate. FibonacciExtensions Thistoolisusedbytechnicaltraderstoforecastpotentialareasofsupportorresistance.Firstplotthehighandthelow.Inthefigurebelow, $45ishigh,and$36islow.This$9 rangeisnowthe100%to0%range.ExtensionsconsistofallFibonacciretracementlevelsthatexceedthestandard100%level.Fibonacciextensionspredictthatamovewilladvanceuntilitreachesthe161.8%or261.8%Fibonacciresistancelevelsandthenreverseitsdirection. Asshowninthefigurebelow,oncethepricebreaksabove$45(100%),atraderwillsethisorherinitialtargetat$50(161.8%ofour$9range)abovethestartingpointof$36,andthesecondarytargetat$59(261.8%). ImagebySabrinaJiang©Investopedia 2020 ChartPatterns Oneofthemostcommonmethodsofsettingatargetpriceisachievedbyfirstidentifyingatechnicalchartpattern.Afterthepatternisidentified,pricetargetscanbesetbymeasuringtheheightofthepatternandthenaddingitto(orsubtractingitfrom)thebreakoutprice.Forexample,asyoucanseeinthefigurebelow,theheightoftheascendingtriangleisaddedtothebreakoutpricetodetermineapotentialareaoffutureresistance. ImagebySabrinaJiang©Investopedia 2020 Asyouknow,nothingisguaranteedinthefinancialmarkets,andthereisnomagicwaytodeterminefutureresistance.Thetoolsmentionedabovemaygiveyouabetterideaofwheretosetpricetargets,butdon'tsolelyrelyonthese—theymaynotalwayswork. CompareAccounts AdvertiserDisclosure × TheoffersthatappearinthistablearefrompartnershipsfromwhichInvestopediareceivescompensation.Thiscompensationmayimpacthowandwherelistingsappear.Investopediadoesnotincludealloffersavailableinthemarketplace. Provider Name Description RelatedArticles AdvancedTechnicalAnalysisConcepts AdvancedFibonacciApplications TechnicalAnalysisBasicEducation StrategiesforTradingFibonacciRetracements TechnicalAnalysisBasicEducation HowDoITargetaBreakoutinaTechnicalChart? TradingSkills&Essentials 10DayTradingStrategiesforBeginners TechnicalAnalysisBasicEducation Channeling:ChartingaPathtoSuccess TechnicalAnalysisBasicEducation WhatAreFibonacciRetracementsandFibonacciRatios? PartnerLinks RelatedTerms FibonacciExtensionsDefinition Fibonacciextensionsareamethodoftechnicalanalysiscommonlyusedtoaidinplacingprofittargets. more FibonacciClustersDefinitionandUses FibonacciclustersareareasofpotentialsupportandresistancebasedonmultipleFibonacciretracementsorextensionsconvergingononeprice. more RectangleDefinitionandTradingTactics Arectangleisapatternthatoccursonpricecharts.Itshowsthepriceismovingbetweendefinedsupportandresistancelevels. more FibonacciChannelDefinition TheFibonaccichannelisavariationoftheFibonacciretracementtool,withsupportandresistancelinesrundiagonallyratherthanhorizontally. more FibonacciNumbersandLinesDefinitionandUses FibonaccinumbersandlinesaretechnicaltoolsfortradersbasedonamathematicalsequencedevelopedbyanItalianmathematician.Thesenumbershelpestablishwheresupport,resistance,andpricereversalsmayoccur. more TripleTopDefinition Atripletopisatechnicalchartpatternthatsignalsanassetisnolongerrallying,andthatlowerpricesareontheway. more