What support and resistance are
Support is a price area where falling prices have stopped or turned up before. Resistance is a price area where rising prices have stopped or turned down before. Both are areas on a chart where buying or selling interest has shown up in the past.
These levels describe past behaviour, not future behaviour. A level shows where traders reacted before. It does not show that they will react the same way again. Support and resistance are part of technical analysis, which studies price history to build a structured view of the market. If you are new to charts, start with technical analysis basics.
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Why levels are zones, not lines
Many beginners draw a single thin line at an exact price. Real markets rarely turn at the same exact price twice. Spreads differ between brokers, candles leave wicks, and orders sit across a range of prices rather than at one point.
A more realistic approach is to mark a zone, a band with an upper and lower edge:
- The wick edge is the extreme high or low where price was rejected.
- The body edge is where most candles opened or closed near the level.
The area between these edges is your zone. On a higher timeframe the zone will be wider in price. On a lower timeframe it will be narrower. Some traders use the ATR indicator to judge how wide a zone should be relative to normal price movement.
How to draw support and resistance
The steps below work on any charting platform, including MetaTrader 4 and MetaTrader 5.
Step by step
- Start on a higher timeframe. Daily or weekly charts show the levels that more traders watch. Then move down to the timeframe you trade. See multiple timeframe analysis.
- Find clear turning points. Look for swing highs and swing lows where price reversed with a visible move afterwards. Small pauses in the middle of a move matter less.
- Look for repeated reactions. An area where price turned more than once carries more information than an area touched a single time.
- Draw a rectangle, not a line. Cover the wicks and the cluster of candle bodies around the turning points.
- Keep only the relevant zones. Mark the nearest zones above and below the current price. A chart covered in lines makes it hard to see anything clearly.
- Update as price moves. Delete zones that price has passed through decisively and no longer respects.
A drawn example chart
The sketch below is an illustration, not a real market. It shows a range with a resistance zone above and a support zone below, followed by a break and a retest.
How to read it:
- Points B, D and F are swing highs that stopped inside the same band. That band is the resistance zone.
- Points A, C and E are swing lows inside a lower band. That band is the support zone.
- At G price closes above resistance. This is a breakout.
- At H price comes back to the old resistance zone and turns up from it. The old resistance is now acting as support. This is role reversal, explained below.
Nothing in this sketch says what price would do next. It shows how the zones are identified, nothing more.
Role reversal: when resistance becomes support
When price breaks through a resistance zone and later returns to it, the zone often acts as support. The reverse also happens: broken support can act as resistance.
A common explanation is that traders who missed the original breakout place orders near the old level, and traders who were caught on the wrong side close their positions there. Whatever the reason, role reversal does not always happen. Sometimes price returns to the old zone and moves straight through it again. Retests are covered in more detail on the pullbacks and breakouts pages.
Round numbers and other common levels
Some levels attract attention because many people watch them, not because of past turning points.
- Round numbers. Prices ending in zeros, such as a whole figure on a currency pair or a round price on gold or an index, are easy to remember and are often used for orders. See psychological levels.
- Previous day, week or month highs and lows. These are widely watched reference points.
- Pivot points. These are calculated from the previous period's prices. See pivot points.
- Moving averages. These act as a level that moves with price, often called dynamic support or resistance. See dynamic support.
When a horizontal zone lines up with a round number or another reference level, more traders may be watching that area. That makes reactions there more visible. It still does not guarantee anything.
Why levels break
Every level eventually breaks. Knowing why helps you avoid treating a zone as a wall.
- Orders get used up. Each touch fills some of the orders waiting at a level. After many touches, there may be fewer orders left to stop price.
- News and fundamentals change. A central bank decision or data release can shift the balance of buyers and sellers within seconds. Old chart levels then matter far less. See fundamental analysis.
- Stop orders sit just beyond the zone. Many traders place stop-losses just past obvious levels. When price reaches them, those stops turn into market orders and can push price further. This is often discussed as a liquidity sweep or stop hunt.
- The trend is stronger than the level. In a strong trend, price can pass through several zones with little reaction. See market trends and market structure.
- The zone was drawn badly. A level based on a single minor swing, or drawn only on a very low timeframe, may never have been significant.
Common failure modes
These are the mistakes that most often make support and resistance misleading:
| Failure mode | What happens | What to check |
|---|---|---|
| Line instead of zone | Price overshoots by a few pips and the level looks "broken" | Draw a band covering wicks and bodies |
| Too many levels | Every price is near some line, so no level means anything | Keep only clear, nearby zones |
| False breakout | Price closes beyond the zone, then returns inside it | Read the breakouts guide |
| Ignoring the timeframe | A lower-timeframe level is treated as major | Confirm on a higher timeframe |
| Ignoring news | A level is expected to hold through a major release | Check the economic calendar |
| Stop placed exactly at the level | A small move past the zone closes the trade | Plan stops beyond the zone, sized to your risk |
Support, resistance and risk
Zones help you decide where a trade idea is no longer valid and where a stop-loss could sit. They do not tell you to buy or sell, and they do not improve the odds by themselves.
Leveraged forex and CFD trading can lose money fast, including when a level that held many times suddenly breaks. Decide your position size and maximum loss before you enter. The risk management page explains how. Practising level drawing on a demo account lets you test your method without risking money.
Related tools: trendlines, supply and demand zones, price action, Fibonacci retracement.
Frequent questions
What is the difference between support and resistance?
Support is an area below the current price where falling prices have turned up before. Resistance is an area above the current price where rising prices have turned down before.
How do I draw support and resistance levels correctly?
Start on a higher timeframe, find clear swing highs and lows, and mark a zone covering the wicks and candle bodies where price reacted more than once. Then refine it on your trading timeframe.
Should I use wicks or candle bodies?
Use both. The wicks show the extreme rejection, and the bodies show where most trading closed. The space between them forms the zone.
Are support and resistance the same as supply and demand zones?
They are related. Supply and demand zones focus on the area where a strong move started. Support and resistance focus on areas where price reacted repeatedly. See supply and demand zones.
Does a level get stronger with more touches?
More touches show the level is widely watched. Each touch can also use up waiting orders, so a level touched many times may be closer to breaking, not further from it.
Can support and resistance predict price?
No. They show where price reacted in the past. They help you plan entries, exits and stop-losses, but they do not predict the next move.