Support and Resistance Levels
Support and resistance are price zones where buying or selling pressure historically caused reactions. They're not magic lines — they're areas where market participants made decisions.
Support vs Resistance
SupportPrice zone where buying pressure stops decline
ResistancePrice zone where selling pressure stops rise
When support breaks, it often becomes resistance (and vice versa). This is called "role reversal."
How to Identify Levels
- Previous swing highs/lows: Where price turned before
- Multiple touches: More touches = stronger level
- Round numbers: 1.3000, 1.3500, etc.
- Gap fills: Price often returns to fill gaps
- High volume areas: Where significant trading occurred
Zones, Not Lines
Think of support/resistance as zones, not exact lines:
- Price rarely hits exact levels perfectly
- Allow some buffer (few pips) around levels
- Watch for reactions within the zone
A level that "broke" by 2 pips and reversed isn't really broken — it's a liquidity sweep.
Trading Support/Resistance
Bounce Trade
- Wait for price to reach the zone
- Look for rejection (wick, reversal candle)
- Enter in direction of bounce
Break Trade
- Wait for clear break through the zone
- Wait for retest of broken level
- Enter in direction of break after retest
Don't trade the break itself — wait for confirmation.
Common Mistakes
- Drawing too many levels (chart looks like a grid)
- Ignoring higher timeframe levels
- Trading every touch without confirmation
- Not adjusting levels as price action develops