Support & Resistance: Why Price Stops and Reverses

As you look at charts, you'll naturally start to wonder:

"Why does price keep stopping, bouncing, or breaking at similar levels?"

There are places in the market where many participants feel: "This is cheap" or "This is expensive."

These places are:

• Support: → An area where price stops falling or bounces up.
• Resistance: → An area where price stops rising or gets rejected.

In this guide, we will cover:

• The basic concept of Support & Resistance (S/R)
• Why you should view them as Zones, not Lines
• How to pick important levels on higher timeframes
• The structure of role reversal (Support becoming Resistance, and vice versa)
• Common misconceptions beginners have about S/R

1. The Intuition Behind Support and Resistance

Simply put:

• Support
  • A level where price dropped in the past, but buying pressure became strong enough to prevent it from going lower.
• Resistance
  • A level where price rose in the past, but selling pressure became strong enough to prevent it from going higher.

In other words, S/R can be seen as the scars of "places where buyers and sellers fought fiercely in the past."

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As shown above:

• When price approaches the blue zone below, buying power strengthens, causing price to bounce.
• When price approaches the red zone above, selling power strengthens, causing price to stall.

The core of S/R is:

"Places where a fight occurred in the past are likely to be remembered by people in the future."

So when price returns to that level later, market participants are likely to react in a similar way.

2. Why You Must See Them as Zones, Not Lines

Beginners often try to see S/R as a precise single line.

"Price will definitely bounce at $23,456."

But the real market:

• Liquidity, slippage, price differences between exchanges
• Clusters of orders from various participants

Because of these factors, price does not always react at the exact same number.

So in practice:

• Instead of a single price, view it as "roughly this area".
• It is much more useful to view it as a Zone with thickness.

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As shown above:

• If you mark it as a box with thickness instead of a line:
  • Slight penetrations (wicks)
  • Slight exaggerations (spikes)

You can accept these while viewing it as "this entire area is the battlefield."

If you don't view it this way:

• You might think a level is broken just because it moved 1-2 ticks or dollars past your line.
• You become overly obsessed with "did the line break or not?"

3. Representative Places That Become S/R

Not every level can be called Support or Resistance. However, the following places are good candidates:

3-1. Obvious Swing Highs/Lows

• Highs and lows that "jump out at you" when looking at the past chart.
• Especially:
  • Places where volume exploded.
  • Places where a large movement started.

3-2. Top and Bottom of Long Ranges (Consolidation)

• If price has been bouncing back and forth inside a box for a while:
  • Box Top: Resistance candidate
  • Box Bottom: Support candidate

3-3. The Starting Point of a Strong Trend

• The "launch pad" where a steep rise or fall began.
• When price tests that area later, the market often reacts again.

After finding these candidates, apply the concepts from Timeframes:

• Keep only the ones that are meaningful on higher timeframes.
• Use lower timeframes to find precise entry timing within those zones.

4. The Power of Higher Timeframe S/R

One of the most important principles when dealing with S/R is:

"The higher the timeframe, the more important the level."

As seen in Timeframes:

• Long timeframe candles like Daily or 4-Hour
• Compress more time and more transactions.

Therefore:

• A place blocked multiple times on the Daily chart
• A support held for a long time on the 4-Hour chart

Is likely a price level watched by far more participants than a 5-minute or 15-minute level.

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In practice, we usually look in this order:

1. On Daily/4H:
   • Mark only the few most obvious major S/R zones first.
2. On 1H/15m:
   • Inside those higher zones,
   • Adjust precisely where the reaction is actually happening,
   • And where to enter/exit.

By doing this:

• You won't get swayed by minor, insignificant levels.
• You can add details while keeping the truly important zones in place.

5. Support Becomes Resistance, and Vice Versa

There is a concept frequently mentioned in S/R:

"Role Reversal (S/R Flip)" When support is broken, it becomes resistance. When resistance is broken, it becomes support.

For example:

• A price that acted as Support for a long time
• Is broken strongly downwards.
• Later, when price comes back up near that level:
  • That place now acts as Resistance.

Or the opposite situation often occurs.

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One reason this happens is:

• People who bought in that zone initially
  • Enter a loss zone when support breaks.
• Later, when price comes back up near there:
  • They think "Let's sell even at breakeven to get out."
  • This creates strong selling pressure.

Similarly:

• When a resistance that couldn't be broken for a long time is strongly broken
• And price settles above it
• When it corrects back to test that resistance area
• It often turns into New Support.

6. Common Mistakes with S/R

S/R looks simple, but it's where many misunderstandings arise in practice.

6-1. "Once a Level, Always a Level"

• Just because a level held well in the past doesn't mean it will work forever.
• If market structure, participants, or macro environments change, the perception of "cheap/expensive" changes even at the same price.

S/R is just a probabilistically meaningful place, not an absolute wall.

6-2. Obsessing Over a Single Line

• Adjusting lines by a few ticks/dollars like 23,500 vs 23,520
• And obsessing over "did the line break or not?"

As mentioned earlier, viewing it as a Zone is much more realistic in practice.

6-3. Clinging Only to Lower Timeframe Levels

• Levels visible only on 1m/5m charts can easily be ignored or broken if you don't know the higher structure.
• What matters is:
  • Where the lower timeframe level is located
  • Within the higher timeframe level.

If you give too much meaning to a lower level that conflicts with a higher level, you'll keep making trades against your plan.

7. Simple Checklist When Drawing S/R

When marking levels on a real chart, asking yourself these questions helps:

1. On which timeframe is this level obvious?
   • Daily / 4H / 1H / 15m?
   • The higher, the more likely it is important.
2. What happened in this zone in the past?
   • Strong reversal?
   • Long consolidation box?
   • Volume spike?
3. How is price reacting to this level right now?
   • Based on Candle Basics, what candles are forming?
   • Based on Volume, is volume decreasing or increasing?
4. If this level breaks, is a Role Reversal likely?
   • Is it a place where support could become resistance?
   • Is it a place where resistance could become support?

If you organize your answers to these questions, you can design "which patterns/strategies to apply based on this level" much more clearly in the later Patterns and Strategy parts.

Next Up

Support & Resistance is the task of finding "places where price reacts meaningfully" on the chart.

In the next article, we will cover Swing vs. Correction, and look at:

• Which movement is the Impulse Wave within a trend
• Which movement is the Correction Wave inside it
• And how this wave structure connects with Support & Resistance.

Continue reading: Swing vs. Correction