Best Forex Brokers
Beginners
Day Trading
Swing Trading
Scalping
HFT Brokers
Hedging Brokers
NDD Brokers
Gold Brokers
No Min Deposit
United States
United Kingdom
Australia
Europe
UAE/Dubai
Singapore
Canada
South Africa
Key Takeaways
- Support is a price level where buying pressure is strong enough to prevent price from falling further.
- Resistance is a price level where selling pressure is strong enough to prevent price from rising further.
- When support is broken, it often becomes resistance (and vice versa)—this is called role reversal.
- The more times a level is tested, the weaker it becomes—eventually it will break.
- Use zones rather than exact lines—support and resistance are areas, not precise prices.
Table of Contents
If there's one skill that separates professional traders from amateurs, it's the ability to identify and trade around support and resistance levels. These horizontal price levels are where the battle between buyers and sellers is most intense, and understanding them is fundamental to reading any price chart.
Whether you're scalping on the 5-minute chart or swing trading on the daily, support and resistance analysis will help you identify optimal entry points, set logical stop losses, and define realistic profit targets. In this comprehensive guide, we'll cover everything you need to master this essential skill.
Pro Tip: Support and resistance are the foundation of price action trading. Master these concepts before moving on to more complex indicators and strategies.
What is Support and Resistance?
Support and resistance are price levels where the forces of supply and demand meet. They represent areas where price has previously reacted, and traders expect similar reactions in the future.
Support (Floor)
A support level is like a floor that prevents price from falling further. At this level:
- Buyers consider the asset "cheap" and step in to buy
- Demand exceeds supply
- Price tends to bounce upward
Resistance (Ceiling)
A resistance level is like a ceiling that prevents price from rising further. At this level:
- Sellers consider the asset "expensive" and start selling
- Supply exceeds demand
- Price tends to reverse downward
Why Support and Resistance Work
Support and resistance levels work because of three psychological factors:
1. Memory
Traders remember where price reversed in the past. If EUR/USD bounced from 1.0500 three times, traders will be watching that level closely the next time price approaches it.
2. Self-Fulfilling Prophecy
When many traders expect a level to hold, they place buy orders there. This collective action creates actual buying pressure, making the support level work.
3. Trapped Traders
When price breaks a support level, traders who bought there are now underwater. When price returns to that level, they often sell to "get out at break-even," turning old support into new resistance.
How to Identify Key Levels
Not all levels are created equal. Here's how to find the most significant support and resistance zones:
Step-by-Step Process
Zoom Out First
Start with the higher timeframes (Weekly, Daily) to find the most significant levels. These "major" levels are respected across all timeframes.
Look for Swing Highs and Lows
Identify where price made significant turning points. These "swing points" are natural support and resistance levels.
Count the Touches
The more times price has reacted to a level, the more significant it is. Multiple touches = stronger level.
Draw Zones, Not Lines
Price rarely reverses at an exact price. Draw a zone (area) rather than a single line. Support at 1.0500 might actually be a zone from 1.0490 to 1.0510.
Look for Confluence
Levels that align with Fibonacci levels, round numbers, or moving averages are even stronger.
Types of Support and Resistance
Support and resistance can be categorized into several types, each with different characteristics:
Horizontal S/R
Fixed price levels that don't change over time. Example: EUR/USD support at 1.0800. The most common and reliable type.
Trendline S/R
Diagonal lines connecting swing highs or lows. Support/resistance that moves with the trend. See our Trendlines Guide.
Dynamic S/R
Moving averages act as dynamic support/resistance. The 50 EMA and 200 EMA are particularly watched by traders.
Psychological Levels
Round numbers (1.0000, 1.1000, 1.2000) often act as support/resistance because they're easy to remember and attract orders.
The Role Reversal Principle
One of the most powerful concepts in technical analysis is role reversal (also called "polarity"). When a support level breaks, it often becomes resistance. When a resistance level breaks, it often becomes support.
How Role Reversal Works
Support Becomes Resistance
- Price breaks below support
- Price rallies back up to the broken level
- Traders who bought at that support sell to break even
- This selling pressure creates new resistance
Resistance Becomes Support
- Price breaks above resistance
- Price pulls back down to the broken level
- Traders who missed the breakout buy on the pullback
- This buying pressure creates new support
Trading Strategies Using S/R
Here are three proven ways to incorporate support and resistance into your trading:
Strategy 1: Bounce Trading
Buy when price bounces off support, sell when price rejects from resistance. This works best in ranging markets.
- Entry: Wait for a candlestick confirmation pattern (hammer, engulfing) at the level
- Stop Loss: Just beyond the support/resistance zone
- Target: The opposite S/R level (support if shorting, resistance if buying)
Strategy 2: Breakout Trading
Trade the break of a key level when price finally pushes through. This works best in trending markets.
- Entry: After a candle closes decisively beyond the level (not just a wick)
- Stop Loss: Back inside the range, below support for long trades
- Target: Measure the previous range and project it from the breakout point
Strategy 3: Retest Trading (Role Reversal)
Wait for a level to break, then enter when price retests it from the other side. Lower risk than breakout trading.
- Entry: On the retest of old resistance as new support (or vice versa)
- Stop Loss: Below the retest low (for longs) or above retest high (for shorts)
- Target: Next significant S/R level or trend-based target
Common Mistakes to Avoid
Don't Do This
- Drawing too many levels (analysis paralysis)
- Using exact prices instead of zones
- Ignoring the overall trend direction
- Fighting strong breakouts
- Expecting every level to hold forever
Do This Instead
- Focus on 3-5 key levels per chart
- Draw zones using rectangle tools
- Trade bounces in range, breakouts in trends
- Accept when levels fail and adapt
- Remember: the more tests, the weaker the level becomes
Start Practicing Today
The best way to learn support and resistance is to draw levels on live charts. Open a free demo account and practice identifying key levels on multiple currency pairs using different timeframes.
Open a Demo AccountFrequently Asked Questions
How do I know if support will hold or break?
You can never know for certain. However, look for clues: strong volume on approach suggests a potential break, while decreasing volume and rejection wicks suggest it may hold. Also consider the broader trend—support is more likely to break in a downtrend.
How many times can a support/resistance level be tested?
There's no fixed number. However, each test weakens the level slightly. After 3-4 tests without a strong bounce, expect the level to eventually break. "The more times a level is tested, the more likely it is to break."
Should I use candle bodies or wicks to draw S/R?
This is a matter of preference. Many traders use candle bodies for cleaner levels, while others include wicks. The best approach is to draw a zone that encompasses both. Don't obsess over the exact price.
What's the difference between major and minor S/R?
Major levels are visible on higher timeframes (Daily, Weekly) and have caused significant reversals in the past. Minor levels are found on lower timeframes and are typically respected only briefly. Always prioritize major levels.
