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Memory in the market
Support is a price zone where falling prices have repeatedly stopped and turned up. Resistance is a zone where rising prices have repeatedly stalled. They exist because traders remember: buyers who missed the last bounce wait there, and sellers who were trapped look to exit there.
Draw zones, not lines
Real levels are rarely exact to the pip. Mark a zone that covers the bodies and most of the wicks of the turning points. Two clean touches make a level worth watching; three or more make it a level other people are watching too.
Start on a higher timeframe. Levels from the daily chart carry more weight than levels that only appear on the five-minute chart.
Breakouts and retests
When price closes decisively through resistance, that old ceiling often becomes a floor. Many traders wait for price to come back and test the broken level from the other side before entering, accepting a slightly worse price for better confirmation.
A breakout that immediately falls back inside the range is a failed breakout, and it is information too: the move lacked conviction.
Key takeaways
- Levels are zones where decisions were made
- Start from the higher timeframe
- Broken resistance often becomes support
- Failed breakouts are a signal too