Learn the fundamentals of support and resistance, the most important concepts in technical analysis. This guide explains what they are, how to identify them on a chart, and how to use them to make better trading decisions with clear examples.
Category: Analysis Techniques|Date: July 18, 2025
In the world of trading, support and resistance are the foundational concepts of technical analysis. Understanding how to identify and use these levels is essential for making informed decisions and managing risk.
This guide will explain what support and resistance are, how to spot them on a chart, and how you can use them to build a solid support and resistance trading strategy.
A support level is a price point on a chart where buying interest is typically strong enough to overcome selling pressure. This can cause a downtrend to pause or even reverse. Think of it as a floor that "supports" the price.
A resistance level is the opposite of support. It's a price point where selling pressure is typically strong enough to overcome buying interest, causing an uptrend to pause or reverse. Think of it as a ceiling that the price "resists" breaking through.
Support and resistance levels are not always horizontal. They can also be diagonal, forming trend lines.
Once you've identified support and resistance levels, you can use them to:
Support and resistance are the building blocks of price action trading. By learning to identify these key levels, you can gain a much deeper understanding of market dynamics and make more strategic trading decisions.
Now that you understand the basics of chart analysis, you're ready to explore some simple trading strategies that you can apply to the markets. Ready to learn more? Check out our guide on A Simple Swing Trading Strategy for Beginners.
This article is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.
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