Whether you’re watching price bounce off a key level or break through a major resistance, these invisible lines on your charts hold the key to understanding market psychology. In fact, professional traders rely on these levels to make consistent profits while minimizing their risks.

Ready to join the profitable minority? This comprehensive guide will walk you through everything you need to know about support and resistance trading – from identifying key levels and drawing them correctly to implementing proven strategies and managing your risks effectively.

Let’s transform those chart lines into powerful trading decisions.

What are support and resistance levels

Support represents a price level where buying interest typically overwhelms selling pressure ¹. At this point, demand becomes strong enough to halt a downward price movement ². Think of support as a floor beneath the price – when the market reaches this level, buyers step in, believing the asset is undervalued ³.

Resistance, conversely, marks a price point where selling pressure overtakes buying interest ¹. This level acts like a ceiling, preventing prices from rising further ². When prices approach resistance, sellers flood the market, often causing a downward price reversal ³.