Buying at Support.

As traders we are aware of the concept: Buy at support, sell at resistance. This is a fine idea as far as theory goes. We also know that this concept works well when (a) markets are in a trading range (b) markets are in an uptrend in which case prices should bounce off support.

Then again, Support will be broken if the Market decides to go down. This can get confusing. When does the market hold support and when does it break down from support?

Like most other technical methods, there are no straight forward answers to this question. A lot depends on the context, the current market environment, short term and long term. Finally, it is about probability. Not all buy at support decisions will work out. Enough should work out to justify this theme as a trading method.

I am discussing this concept today because the Nifty came down to 5270 support. Should we buy here?  There is no certainty that a buy will make money tomorrow. But, we did buy, and, this trade was discussed on CNBC at around 3 PM.

There were two reasons to buy: First, Nifty was standing at a well recognized support level, and, we are in an uptrend. Second, there were two days of declines. Again, if we are in an uptrend, then a bounce is possible. If the market opens weak tomorrow, we should be exiting without delay. The actual decision will depend on the open.

Readers are welcome to provide insights into the concept of buying at support.