Support and Resistance — Trading Wiki

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Published by TradeHQ. Site creator: Anuga Weerasinghe. This page has no recorded editorial review date; the About page explains the site's editorial approach.

What Support and Resistance means

Support and resistance are price areas where traders look for repeated buying or selling responses. Past reactions help define the areas but do not prevent a later price from passing through them.

In depth

Support and resistance describe price areas selected from earlier reactions or other chart rules. A past low can be used to mark support and a past high resistance, but subsequent transactions can occur beyond either. A level’s appearance depends on data frequency, adjustment, chosen tolerance and how many observations are counted. A level marked on a daily chart is not automatically more predictive than one on a shorter interval. Specify the rule before inspecting later prices, record breaks and state whether a purported reaction is an intraday observation or a close.

The drawing is a description, not evidence of hidden demand or a guaranteed exit.

Key points

• Support and resistance label areas of prior reactions rather than floors or ceilings
• Some chart frameworks relabel a crossed level; the next reaction remains uncertain
• Record the selected touches, interval and volume without ranking a level as reliably strongest

Why it matters when you are learning

Draw zones from specified price observations and compare alternative anchors. These are chart descriptions rather than floors, ceilings or a required first trading method.

Worked exercise and its limits

State how close prices must be to count as a touch, then mark a zone using only earlier candles. Keep later breaks in the record. Changing the zone after seeing an outcome makes the exercise vulnerable to hindsight bias.