If you’ve ever looked at a price chart and wondered “why does the price always go up this far and then down?” you’ve already intuitively understood what Support & Resistance is.
Now it’s time to fully understand it.
Before we start the article, if you want to learn how to start forex trading, you can read this article: How to Start Forex Trading: The Ultimate Step-by-Step Guide for Beginners
What is Support and Resistance
Imagine holding a balloon underwater. No matter how much force you apply, the balloon wants to rise.
This pressure you feel from below is exactly what Support does in the market, keeping the price from falling lower.
Now imagine throwing a ball up high. Gravity brings it back down every time. This invisible force from above is Resistance, preventing the price from rising higher.
Simply put:
Support: A price zone below the current price, where the market has repeatedly shown that buyers are coming out on top. It is the “floor” of the market.
Resistance: A price zone above the current price, where sellers are taking control and preventing further increases. It is the “ceiling” of the market.
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Why These Levels Exist? The Psychology Behind Prices
Here’s the most interesting part that most beginner’s guides leave out: Support and Resistance aren’t magic, they’re human psychology on a chart.
Let’s take a look:
Scenario 1: Traders’ Memory
Imagine Bitcoin fell to $80,000 in February, recovered, and is now approaching that level again.
What do traders remember?
Those who bought at $80,000 for example the first time and won, want to repeat the success. They buy there again.
Those who didn’t have time to buy the first time, are now patiently waiting for a second chance.
Those who sold early and lost profits, want to “correct” their mistake.
These three groups of people, when the price approaches $80,000 again, create massive buying interest. The concentration of these orders creates Support.
Scenario 2: The Pain of Wrong Decisions
Now imagine that a stock reached €50 but could not break this level and fell back every time.
Thousands of traders have tried to “break” this level and have lost. This collective memory of failure creates psychological resistance. Every time the price approaches €50, experienced traders start selling knowing from experience that “that’s where it stops”.
The key: Support and Resistance levels are not lines on a chart, they are the imprint of hundreds of thousands of decisions by people all over the world.
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How to Find Support & Resistance on Your Chart
Now comes the practical part. Open any chart in TradingView and follow these steps:
Step 1: Look at the “highs” and lows (Swing Highs & Swing Lows)
A high (swing high) is a point where the price rose and then started to fall.
A low (swing low) is a point where the price fell and then recovered like a valley.
These points are the clearest levels on the chart.
Practice: Open the daily chart of EUR/USD or any stock to find the best levels.
How Strong Is a Level? 4 Factors That Determine Its Strength
Not all Support/Resistance levels are the same. Some are like paper walls that break easily.
Others are like fortresses.
Here’s how to tell the strong from the weak:
Factor 1: How many times the level has been “tested”
A level that the price has touched 3-4 times and bounced back is much stronger than one that has only been tested once. Each successful “bounce” strengthens the psychological imprint in traders’ memory.
Factor 2: How long the level has been “in effect”
A support level that has held for 6 months is significantly stronger than one that has held for 3 days. Time means that more traders have “imprinted” it in their minds.
Factor 3: The Timeframe in which it formed
A level on the Weekly chart > Daily chart > 4H chart > 1H chart > 15min chart.
Simple principle: Higher timeframe = stronger level.
Factor 4: The Trading Volume (Volume)
If a Support level formed while the volume was very high, it means that many traders placed orders there. This creates a “wall” of orders that makes it difficult for the price to break through.
Breakout vs Fakeout: How to Avoid Getting Trapped
This area is responsible for most beginner losses. A “fake” breakout from a level – a Fakeout – can trap you in the wrong position.
What is a Breakout?
A Breakout is when price breaks above a significant Support/Resistance level and continues to move in the same direction. This signals a change in momentum buyers (or sellers) have taken control.
What is a Fakeout?
A Fakeout (or “fake breakout”) is when price breaks above the level but quickly pulls back in. It looks like a breakout but it’s not. Beginners rush into the trade and then price gets their stop-loss.
Break & Retest: The Entry Technique Used by Experienced Traders
If there is one technique that is worth learning well at the beginning of your trading journey, it is Break & Retest.
How it works:
- Break: Price breaks a significant Resistance (or Support) level
- Retest: Price returns to “test” the level it just broke (which has now changed role)
- Confirmation: Price bounces off this level giving you the entry signal
Why is this technique so powerful?
Why don’t you “chase” the move. You wait patiently for the market to come to you, at a level that you know for sure is important.
In this strategy, you can also use the EMA 50 to clearly show you the trend
The 5 Most Common Beginner Mistakes (and How to Avoid Them)
Over-analyzing They “draw” too many levels
Beginners often fill the chart with dozens of lines. Result? They can’t make a decision.
Focus on the 3-5 most important levels on each chart.
The best levels are the ones that are clearly visible even if you look at the chart from a distance.
They only use one Timeframe
If you only look at the 15-minute chart, you miss the big picture. A “strong” Support at 15min can be insignificant on the Daily chart.
Solution: Always start from the Daily/Weekly, then use a smaller timeframe to enter.
They enter the Trade “on the first touch”
The price touches Support and they immediately rush to buy without confirmation.
Solution: Wait for a clear reversal signal a bullish candle, a bullish engulfing pattern, or a pin bar. Confirmation costs a few pips but saves a lot of losses.
They ignore Volume
A breakout without volume is like a fire without fuel, it won’t last.
Solution: Add a Volume indicator to your chart. Every time you see a breakout, check if the volume is above average.
They don’t use Stop-Loss
“It will definitely bounce back” this phrase has ruined more accounts than anything else.
Solution: Every trade should have a Stop-Loss. Place it beyond the Support/Resistance level. If the price gets there, it means your analysis was wrong and that’s completely normal.
The author is not responsible for any financial losses incurred. Additionally, any methods discussed for making money online require effort, consistency, and carry no guarantee of results.
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Yes. Support & Resistance is based on human psychology and supply-demand principles that apply to every market where people trade.
Start with 3-5 main levels on the Daily chart. As you gain experience, you will learn to see which ones are important and which ones are not.
It is not necessary for beginners, but it is common. Popular combinations are: Moving Averages, and Fibonacci Retracements. However, don’t start with too many tools together, it will create confusion.
