This series will be a collection of my personal notes from "Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications" by John J. Murphy - considered to be a seminal book on TA. I'll try to simplify things and keep them short. Overview: Part 1 focuses on the psychology of support and resistance - prepare to do some thought experiments and pay special attention to what you would think in each situation. Let's get started! Divide people into three categories: long, short and undecided. Long and short are essentially jargon for owning the currency vs short selling the currency. For example, if I own LTC then I've taken a long position in Litecoin. Situation: MONA/BTC Chart from early 2017 First of all, notice the overall upward trend on either side of the spike. ![](https://steemitimages.com/DQmcLaLcCtBFCrf9uNnXKeFuci8tnKMZRxhUKfQFt81A9jj/image.png) Step 1 For the upwards movement from 1 to 2, consider the mindset of people who are long, short or undecided: -Long - in a 'winning' position, perhaps they regret not buying more -Short - in a 'losing' position, they think that they might be wrong about their forecasts -Undecided - feel like they're missing out. Let's say that at this point, they think that the price will overall increase in a continuation of the upward trend Step 2 When the price drops from 2 to 3: -Long - can add to their position -Short - can buy out of their short position -Undecided - might be looking for an opportunity to enter a long position As opposing a strong trendline is a dangerous game, Murphy puts forward this reasoning as a possible basis for the reliability of support and resistance lines. What do you think of this reasoning? Further parts will be posted & let me know your thoughts.