What is Support and Resistance?
Support and resistance are price levels where buying or selling pressure is strong enough to prevent the price from continuing in its current direction. They represent the collective psychology of all market participants.
Support
A price level where buying pressure exceeds selling pressure, preventing price from falling further. Think of it as a "floor" that catches price.
- Buyers step in at this level (perceived value)
- Price has bounced from this level before
- More touches = stronger support
- When broken, becomes resistance
Resistance
A price level where selling pressure exceeds buying pressure, preventing price from rising further. Think of it as a "ceiling" that blocks price.
- Sellers take profit or short at this level
- Price has reversed from this level before
- More touches = stronger resistance
- When broken, becomes support
How to Identify Support and Resistance
Identifying strong S/R levels is a skill that improves with practice. Here are the key methods used by professional traders:
Swing Highs and Lows
The most basic method. Mark price levels where clear turning points occurred — where price reversed direction. The more pronounced the swing, the stronger the level.
Volume Profile
High-volume nodes (price levels where the most trading occurred) act as strong S/R. These levels represent where the most capital was exchanged — creating strong memory.
Round Numbers (Psychological Levels)
Prices like $10,000, $50,000, $100 act as psychological S/R because humans think in round numbers. Massive amounts of orders cluster at these levels.
Multi-Touch Zones
When price tests a level 3+ times and bounces, it becomes a proven S/R zone. The more touches without a break, the stronger the level — until it eventually breaks.
S/R Strength Factors
Types of Support and Resistance
📏 Horizontal S/R
Static price levels drawn at swing points. The most reliable type. Represents price memory where significant buying or selling occurred.
📐 Trendline S/R
Diagonal lines connecting swing lows (uptrend support) or swing highs (downtrend resistance). Require at least 2,-ideally 3, touches.
📊 Moving Average S/R
Dynamic levels that move with price. Key MAs (21 EMA, 50 SMA, 200 SMA) act as moving support and resistance in trending markets.
📈 Fibonacci S/R
Levels derived from Fibonacci ratios (38.2%, 50%, 61.8%). These are predictive S/R levels that form before price reaches them.
🔢 Psychological S/R
Round numbers where orders cluster due to human psychology. These levels have no technical basis — they work purely because people think in round numbers.
📋 Gap S/R
Price gaps (mainly in stocks) often act as support or resistance. "Gaps tend to fill" is a classic trading adage, making gap levels important targets.
Support/Resistance Role Reversal
One of the most powerful and reliable concepts in all of technical analysis: when support breaks, it becomes resistance. When resistance breaks, it becomes support. This is called "polarity" or "role reversal."
When buyers fail to defend a support level. The level now represents a price where traders are "trapped" — they bought here and are now underwater. They'll sell on any retest to break even, creating selling pressure (resistance).
When buyers overwhelm sellers at a resistance level. Traders who sold short here are now trapped — they'll cover on any retest, creating buying pressure (support).
Support & Resistance Trading Strategies
1. Bounce Trading
The most conservative S/R strategy. Buy at support, sell at resistance. Best in ranging markets.
2. Breakout Trading
Enter when price breaks through a key S/R level with conviction. Best in trending markets.
3. Retest Entry
Wait for a breakout, then enter on the retest of the broken level. The safest approach.
Frequently Asked Questions
How many times should price touch a level to confirm support or resistance?
A minimum of 2 touches confirms a level, but 3+ touches make it significantly stronger. However, be aware that the more a level is touched, the more likely it is to eventually break. Each test weakens the level slightly as pending orders are absorbed. The strongest S/R levels are those with 3-4 clean touches.
Should I draw support and resistance as lines or zones?
Always draw S/R as zones (bands), not exact lines. Markets rarely respect a precise price — there is always some flex around a level. A zone gives you a range where you expect buyers or sellers to step in. The wider the timeframe, the wider the zone should be. For daily charts, 1-3% zones work well.
What happens when support or resistance breaks?
When support breaks, it typically becomes resistance (and vice versa). This is called role reversal or S/R flip. After a break, price often "retests" the level from the other side before continuing. This retest is one of the most reliable trade setups in technical analysis.
Which timeframe is best for drawing support and resistance?
Higher timeframes (Daily, Weekly) produce the strongest S/R levels because more traders and capital are watching them. Start with the weekly chart to identify major levels, then use the daily chart for precision. Trade on the 4H or 1H chart using those higher-timeframe levels as your framework.
How do I know if a breakout is real or false?
Confirm breakouts with: 1) A full candle close beyond the level (not just a wick), 2) Above-average volume on the breakout candle, 3) Follow-through the next candle. Wait for the retest of the broken level for the safest entry. About 30-40% of initial breakouts are false, so patience pays.
Practice Support & Resistance Trading
Mock Trade Challenge
Identify key levels and trade the bounce or breakout.
Price has tested the $114 support level three times without breaking below. A double bottom is forming...
What would you do here?
Test Your Knowledge
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What happens when a support level is broken?