What support and resistance are

  • Support is a price area where falling prices have repeatedly stopped and turned higher.
  • Resistance is a price area where rising prices have repeatedly stalled and turned lower.

They form because many traders remember those prices and place orders around them.

How to find them

  1. Start on a higher timeframe such as the daily chart.
  2. Look for areas where price turned at least two or three times.
  3. Draw a zone, not a thin line. Prices rarely turn at exactly the same level.
  4. Round numbers (such as 1.1000 on EUR/USD) often act as support or resistance.

How traders use them

  • Entries: buying near support in an uptrend, or selling near resistance in a downtrend.
  • Stop losses: placed just beyond the zone, where the idea is proven wrong.
  • Targets: the next support or resistance zone is a natural place to take profit.

When levels break

Support and resistance are areas where reactions are more likely, not guaranteed. When price breaks firmly through a level, old support often becomes new resistance, and vice versa.