Support and resistance (S/R) levels are price zones where buying or selling pressure has historically prevented the price from continuing in its current direction. Support is a floor where buying emerges; resistance is a ceiling where selling appears. S/R levels are the foundation of technical analysis and provide the framework for every trade setup.
Horizontal S/R: price levels tested multiple times. Dynamic S/R: moving averages, trend lines. Psychological levels: round numbers ($100, $50,000). Broken support becomes resistance (and vice versa). Volume-based S/R: high-volume nodes from volume profile. Multi-timeframe S/R: higher-timeframe levels carry more weight.
Buy at support with confirmation (bounce candle, volume spike, RSI oversold), Short at resistance with rejection signals, Trade the break-and-retest of broken S/R, Watch for confluence zones (multiple S/R types converging at the same price)
Stop beyond the S/R zone. Target the next S/R level. For break-and-retest: enter on the retest, stop beyond the level, target 1× the distance from S/R to the next S/R. Partial profits at intermediate levels.
All timeframes — Weekly/Daily S/R are the strongest
The most powerful S/R levels are those visible and obvious on the chart. If a level is subtle or requires squinting, it's probably not significant. Stick to levels that are clean and tested multiple times.
The Moving Average Convergence Divergence (MACD) measures the relationship between two exponential moving averages (typically 12 and 26 period). The MACD line is the difference between these EMAs, and the signal line is a 9-period EMA of the MACD. The histogram shows the distance between MACD and signal lines. MACD is a hybrid trend-following and momentum indicator.
Supply and demand zones are price areas where significant buying or selling previously occurred, causing a strong directional move away from the zone. Unlike traditional support and resistance which uses lines, supply and demand trading identifies zones — ranges of price — where institutional orders created imbalances. When price returns to these zones, unfilled orders may trigger a reaction, providing high-probability trading opportunities.
Pivot points are mathematically derived horizontal levels calculated from the previous period's high, low, and close that serve as potential support and resistance for the current period. The central pivot point acts as the primary directional bias level, while support and resistance levels above and below provide profit targets and stop placement zones. Pivot points are widely used by institutional and floor traders, creating self-fulfilling price reactions.
Multi-timeframe analysis (MTA) uses multiple chart timeframes to build a complete picture of market conditions. The higher timeframe provides trend direction and key levels. The intermediate timeframe confirms momentum. The lower timeframe provides precise entry timing. This 'top-down' approach dramatically improves trade quality.