#1 discuss some disadvantages of technical analysis.

#2 explain the reasoning behind a support level and a resistance level.

#1 Being based entirely upon previous price patterns of the stock rather than fundamental analysis of events, prospects and balance sheets, technical analysis is often wrong.

#2 A support level is a low stock price that has been reached several times but not penetrated on the downside. A resistance level is a high stock price that has been reached several times but no exceeeded.

#1 Disadvantages of Technical Analysis:

Technical analysis is a method used by traders and investors to make predictions based on historical price and volume data of a security. While some individuals find it helpful in making investment decisions, there are certain disadvantages to consider:

1. Subjectivity: Technical analysis relies heavily on interpretation and subjective analysis. Different analysts may draw different conclusions from the same chart patterns, making it difficult to have a consensus on the expected price movement.

2. Lack of fundamental analysis: Technical analysis primarily focuses on historical price and volume data, neglecting to consider fundamental factors such as company financials, industry trends, and economic indicators. Without incorporating these fundamental aspects, traders may miss out on critical information that could impact the stock's performance.

3. False signals: Technical analysis relies on the assumption that past price patterns repeat themselves in the future. However, the market is influenced by various factors such as news events, geopolitical events, and investor sentiment, which may overshadow historical trends and create false signals.

4. Limited predictive power: Technical analysis provides insights into short-term price movements, but it may not be as accurate in predicting longer-term trends or major market reversals. Market conditions can change rapidly, making technical patterns less reliable in uncertain or rapidly changing market environments.

5. Overcrowding: Technical analysis is widely used by traders, which can lead to overcrowding and creating a self-fulfilling prophecy. When too many participants follow the same indicators or patterns, it can lead to market inefficiencies and increased volatility.

To mitigate these drawbacks, it is often useful to combine technical analysis with other forms of analysis, such as fundamental analysis, to make more informed investment decisions.

#2 Support and Resistance Levels:
In technical analysis, support and resistance levels represent specific prices on a chart where stocks or other financial instruments tend to stall, reverse, or experience significant buying or selling pressure. Understanding the reasoning behind these levels can help traders make more informed decisions.

1. Support Level: A support level is a price level at which buying pressure is expected to be strong enough to prevent the stock or asset from declining further. It indicates a level where demand exceeds supply, resulting in a potential reversal or bounce-back in price. Traders often view support levels as potential buying opportunities because they offer a favorable risk-to-reward ratio. If the support level is broken, it may indicate a further decline in price as selling pressure could increase.

2. Resistance Level: A resistance level, on the other hand, is a price level at which selling pressure is expected to be strong enough to prevent the stock or asset from rising further. It indicates a level where supply exceeds demand, leading traders to anticipate a potential reversal or price pullback. Resistance levels are often viewed as potential selling opportunities because they provide a chance to take profits or initiate short positions. If the resistance level is breached, it may indicate further upward momentum in price as buying pressure could increase.

Support and resistance levels are significant because they provide traders with key price levels where buying or selling interest is likely to emerge. By identifying these levels, traders can use them to set entry and exit points, place stop-loss orders, and gauge potential price targets. It's important to remember that support and resistance levels are not absolute, as they can shift or break due to changing market conditions or significant news events. Therefore, it is crucial to use other indicators and tools alongside support and resistance levels to validate trading decisions.