Learn to identify key price levels, draw support and resistance lines like a pro, and build a solid foundation of technical analysis.
About 8 minutes · One knowledge check
Ask about the video, the chart, or how this concept affects a trading decision.
Complete one planned decision at a time. The objective is to follow a defined process, not to pursue a particular outcome.
Record the setup, the decision taken and one action you would repeat or change.
Open decision journal →Use this full reference alongside the interactive lessons, knowledge checks and guided paper-practice exercise.
Support and resistance are the most fundamental concepts in all of technical analysis. Every serious trader — from beginners to hedge fund managers — uses these levels as the basis for identifying trade entries, exits, and stop loss placement.
Support is a price level where buying interest is strong enough to prevent the price from falling further. Think of it as a floor. When price approaches support, buyers step in and the price bounces up.
Resistance is a price level where selling pressure is strong enough to prevent the price from rising further. Think of it as a ceiling. When price approaches resistance, sellers step in and the price turns down.
These levels exist because of market memory and human psychology. When price previously bounced strongly from a certain level, traders remember that level. When price approaches it again, they expect the same thing to happen. Enough traders acting on this expectation makes the level self-fulfilling.
Key sources of support and resistance include: previous swing highs and lows, round numbers (e.g., $50,000 for Bitcoin, $100 for a stock), previous areas of heavy trading volume, and moving averages acting as dynamic levels.
One of the most important concepts is role reversal. When a support level is broken decisively, it often becomes a resistance level. When a resistance level is broken, it often becomes support. This is because the traders who were buying at that support (now broken) are sitting at a loss and will sell when price returns to their entry — turning that old support into resistance.
Connect the bodies of candles, not just the wicks. Wicks can occasionally pierce through levels without invalidating them — the body of the candle is where the significant price action occurred. Look for at least two or three touches of a level before treating it as significant. A level that has been tested many times is stronger than one that has only been tested once.
Bounce Trading: Enter a long trade when price pulls back to a key support level and shows a bullish candlestick signal (hammer, bullish engulfing). Place stop loss just below the support. Target the next resistance level.
Breakout Trading: Wait for price to close convincingly above resistance on above-average volume. Enter on the breakout or on a retest of the broken resistance (now support). Stop loss below the breakout level.
For educational purposes only. Conduct your own analysis before any trading decision.
