Support and resistance are the foundation of all price-action trading. Support is a level where price stops falling — buyers step in. Resistance is a level where price stops rising — sellers step in. These levels form because of human memory: traders remember where price reversed before and act on it again.
How to Identify Strong Levels
- ▸Multiple touches — the more times price reverses at a level, the more significant it is.
- ▸Strong reactions — a level where price bounces sharply is stronger than one where it lingers.
- ▸Confluence — a level that aligns with a moving average, round number, or prior swing is stronger.
- ▸Higher timeframe — levels visible on H4 or D1 carry more weight than M15 levels.
Role Reversal
When price breaks through a level, the level often flips its role. Broken support becomes new resistance; broken resistance becomes new support. This works because traders who missed the move at the old level now defend it from the other side.
Traders who bought at support and saw it break are now underwater — they want to sell at breakeven when price returns. Their selling creates resistance at the exact level of the old support.
How to Trade S&R
There are two basic approaches: the bounce and the breakout.
The Bounce (Reversal)
Wait for price to reach a level, then look for confirmation that it's holding — a candlestick pattern (pin bar, engulfing) or a smaller-timeframe reversal. Enter with a stop just beyond the level.
The Breakout
When price breaks a level with conviction, enter in the direction of the break. The risk: many breakouts fail (fakeouts). Confirm with volume or a retest of the broken level.
The highest-probability setups combine multiple factors: price at a strong S&R level + a candlestick reversal pattern + confluence with an indicator like RSI divergence. One factor alone is a guess; three together is a trade.