Support & Resistance
Price levels where buying or selling has repeatedly appeared — the market's memory, and the anchor for entries and stops.
Price StructureIntermediate 6 min read· Lesson 3 of 13 in Technical Analysis
Explanation
SUPPORT is a level where declines have repeatedly stopped (demand); RESISTANCE where rallies have stalled (supply). They form at prior swing points, round numbers, and heavy-volume zones — anywhere many participants remember transacting.
Interpretation
Levels are ZONES, not lines — expect overshoot. The more touches and the higher the volume at a level, the more meaningful it is. Broken resistance often becomes support (and vice versa) — trapped traders exiting at breakeven supply the flip.
Trading use
Levels turn vague opinions into structured trades: buy near support with a stop just below it (small, defined risk), target resistance. Risk/reward becomes measurable — see the Risk Management course.
Common mistakes
Drawing ten levels until one 'works' (keep only the obvious ones a child could spot), and placing stops EXACTLY at the level where every other stop sits — give them room beyond the zone.