Is there any formula to determine support prices or does it keep changing for different stocks? What are the most realistic ways to find support prices for stocks?
There are different ways to determine support prices of stock. Generally there is no fixed formula for calculating support prices,support/resistances keep changing for the stocks. If you want a mathematical formula maybe you can use pivot points. But the best way is to visually look in the chart to find the areas of supply/demand imbalance,so support areas are where demand for the stock is more than the supply and prices therefore tend to stop falling near the support areas.
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Determining where the price of an asset will stop once it has created a new high is one of the most difficult tasks for any trader. There is no magic way to determine what price an asset is likely to reach, but technical traders have developed a number of methods that can at least give you a fairly good estimate
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Different approaches to this:
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Scalpers would want to determine S/ R levels for the recent five 5 minute candles to take the trade. Swing Trader would want to know the levels for End of the Day charts. Long term trader would want to know the levels based on Weekly/ Monthly charts. Technically, it is not possible to have same S/R levels across all time frames as Open-High-Low-Close of candles/ bars are different for different Time Frames.
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Generally though, S/R levels are plotted on EOD candles and 7 LEVELS are provided. S1, S2, S3, Pivot, R1, R2, R3.
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Keeping things simple, there is no calculation required for the levels except for Pivot. Getting S/ R lines is pretty simple. On a chart, draw a horizontal line such that it joins O-H of one candle with O-H of at least one more candle OR it joins L-C of one candle with L-C at least one more candle. Pivot can be calculated in different ways, no clue which one is correct amongst them.
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Support price for a stock means.. in a layman language is that when the price of the stock is falling down and comes to a certain price where it might consolidate for more bars and then likely to determine its trend for coming time, ( here the tf can be anything from minutes/ hours/ days/ week or year too). Several factors that lead to spot the exact support for a stock . They are as follows..
history prices
once a resistance today it can become a support
volume ( dry or aggressive... whether on buying or selling)
pattrens ( like channels/ head and shoulder/ traingles)
trendlines
overall it is a price where the supply (selling stops eventually) stops and a demand is emerged and hence buyers come in thus giving a volume (stopping volume) on buying side. and it is said that stock has taken support
on the other hand at the same price if instead of demand coming ,selling becomes more aggressive thus giving a volume bar with no stopping volume it s said suport to be broken and the stock continues its southward journey looking for next prominent level.
if one is in technicals for good years the naked eyes can easily spot the support / resistance for a stock without the help of any indicator or tool.
EXAMPLE,,, at current tatasteel eod chart (cash)...
why tisco bounced back from 335 levels and today moved till 360 ..?
335 was the support in eod,, tested on 28 feb and 3 rd feb,, 2014.. and it respected for the third time again and bounced back to 360,, but now in coming bars it wont take this support into account and now this suport will turn into resistance for coming days,,,