What They Are
Support is a price zone where buying interest has historically been strong enough to halt declines. Resistance is a zone where selling interest has repeatedly stopped rallies. Both are *zones*, not exact lines.
Why They Form
- Prior swing highs and lows attract order flow
- Round numbers (1.1000, $100, 50,000) attract institutional interest
- Volume profile clusters reveal traded interest
How to Draw Them
- Focus on major turning points on higher timeframes
- Use zones (a band, not a line)
- Look for at least two touches for validity
Trading Support and Resistance
- **Bounce**: buy at support / sell at resistance with a stop just beyond
- **Break-and-retest**: wait for the level to fail and re-test as the opposite role before entering
Role Reversal
Once broken, a resistance often becomes support (and vice versa). This flip is one of the most reliable technical concepts.
Key Takeaways
- S/R are zones of expected order flow, not magic numbers.
- Look for confluence with round numbers and higher timeframes.
- Always define an invalidation level for your trade.