Technical Analysis
Support & Resistance
Horizontal price levels where buying or selling pressure has repeatedly emerged — the foundation of all technical analysis.
Key rules
- Support = prior lows, demand zones, round numbers; Resistance = prior highs, supply zones
- Think in zones (bands), not single price lines
- Broken resistance becomes support (role reversal) — and vice versa
- More touches = stronger level, but also more likely to eventually break
- A candle close (not just wick) through a level is required to confirm a break
Support and resistance are the most fundamental concepts in technical analysis. Support is a price level at which buying interest is strong enough to prevent further decline. Resistance is a level at which selling interest is strong enough to prevent further advance.
**How Zones Form** S/R zones form at: - Previous swing highs and lows - Round numbers and psychological levels (e.g., 100, 1000, 50,000) - Areas of price congestion (multiple candle bodies stacking) - Prior breakout levels (old resistance becomes support after a breakout)
**Zones, Not Lines** Price rarely turns on a precise tick. Think of S/R as zones or bands, not single lines. A zone typically spans 0.5–1.5% of the asset's price.
**Role Reversal** When resistance is broken convincingly, it typically becomes support — and vice versa. This is called role reversal and is one of the highest-probability re-entry setups in trading.
**Strength of a Level** The more times a level has been tested and held, the stronger it is — but also the more likely it is to break when eventually tested. A level that has been tested 4+ times is under significant pressure from unfilled orders on the other side.