Take a further look at the chart from the previous page, but this time with the volume bars in the chart. The larger the bar, the more volume of shares traded that day.

The red lines drawn over the chart are approximately where the share price beaks down through subsequent support levels. In each section, the volume of shares traded increases.

Now consider one of these many investors who thought they were getting a bargain or took some poor advice by purchasing in this downtrend at around $5 (the second support level shown here). If they did not sell, then they have made an immediate loss. The psyche of the uneducated investor is to hold onto the stock unless they need the money. They hold the stock because that is what is what they have been told to do by everyone around them, their family, their broker, to popular TV programs and books. And if they sell now, they have to admit to that loss which the ego definitely does not like.

Any investor who bought at $5 would have watched for several months as the value of their portfolio fell. For many, they would have stopped watching the share price because it reminds them of their failure. But this company is a quality company and it found a solid support line at around $4.20. The price stayed in an accumulation phase for some time and then finally started to rise. Our investors would have been buoyed by this in the hope that they will at least get their money back. So do they ride out this price rise to as far as it can go and make a decent profit? No. They sell and are happy they broke even. Six months of losses is enough impetus to ring their broker. It is only when the supply of people wanting to sell at $5 is exhausted, can the share price break this resistance and increase in an uptrend. The support for the stock on the way down is the resistance for the stock on the way back up. You can clearly see this in the diagrams below.

The amount of shares available for sale at $5 was so high that it exhausted available buyers at this price. With none left to buy at this price, the price fell. As you can see it is nearly back to the baseline support in this chart.
The important lesson to learn from this chart is that the future performance of the share price can be directly related to the past.