Support & Resistance Levels
Overview
Support and resistance (S/R) levels are price zones where buying or selling pressure has historically prevented the price from continuing in its current direction. Support is a floor where buying emerges; resistance is a ceiling where selling appears. S/R levels are the foundation of technical analysis and provide the framework for every trade setup.
Key Concepts
Horizontal S/R: price levels tested multiple times. Dynamic S/R: moving averages, trend lines. Psychological levels: round numbers ($100, $50,000). Broken support becomes resistance (and vice versa). Volume-based S/R: high-volume nodes from volume profile. Multi-timeframe S/R: higher-timeframe levels carry more weight.
Entry Signals
Buy at support with confirmation (bounce candle, volume spike, RSI oversold), Short at resistance with rejection signals, Trade the break-and-retest of broken S/R, Watch for confluence zones (multiple S/R types converging at the same price)
Exit Signals
Stop beyond the S/R zone. Target the next S/R level. For break-and-retest: enter on the retest, stop beyond the level, target 1× the distance from S/R to the next S/R. Partial profits at intermediate levels.
Best Timeframes
All timeframes — Weekly/Daily S/R are the strongest
Pro Tips
The most powerful S/R levels are those visible and obvious on the chart. If a level is subtle or requires squinting, it's probably not significant. Stick to levels that are clean and tested multiple times.
More Topics in This Category
Bollinger Bands
Bollinger Bands consist of a middle band (20 SMA by default) and upper/lower bands set at 2 standard deviations from the middle. The bands expand during high volatility and contract during low volatility. The squeeze (narrow bands) often precedes a significant move, making Bollinger Bands excellent for volatility-based setups.
Gap Trading Strategies
Gaps occur when price opens significantly above or below the prior close, leaving an unfilled space on the chart. Gap trading strategies exploit the tendency for gaps to either fill (price returning to close the gap) or continue (price extending in the gap direction). Understanding gap types — common, breakaway, runaway, and exhaustion — helps traders determine whether to fade the gap or trade its continuation.
Chart Patterns (H&S, Wedges, Flags)
Chart patterns are geometric price formations that signal continuation or reversal. Major patterns include: Head & Shoulders (reversal), Double Top/Bottom (reversal), Bull/Bear Flags (continuation), Rising/Falling Wedges (reversal), Ascending/Descending Triangles (continuation/reversal). All are measured-move patterns with projected price targets.
Trend Lines & Channels
Trend lines connect swing lows (uptrend) or swing highs (downtrend) to define the trend direction and provide dynamic support/resistance. Channels add a parallel line to create a trading range within the trend. Trend line breaks signal potential trend changes. Valid trend lines require at least two touches, with three or more being more significant.