Technical Analysis Lessons: Support and Resistance

Risk disclaimer: I am not a financial advisor. Trading involves risks, trade at your own risk.

What is support?

In financial markets, there is a price point/level where the price of a particular asset is kept up from falling, traders mark horizontal line on these areas and referred to them as support area.

What is resistance?

Opposite to support a particular level where price is kept from rising upwards, traders mark a horizontal line on this areas and refer to them as resistance

Important charactaristics of S/R:
SR flip: Support and Resistance lines flips when the level is broken by price. Broken resistance turned into support and broken support turned into resistance when price decides to go back to the levels. These SR flip tends to be significant when a candle closes(more about this in future lessons) in the broken price points.
Tests and retests:
The more time a support or resistance line is tested the weaker it becomes. So as an entry point it makes sense to enter when a broken resistance is tested for the first time as support. This does not mean that you cant enter in the third or fourth retest of the level. Again entry and exit points are entirely dependent upon you, the trader taking actions. Time Frame plays an important part in the retest or SR structures. Some retests are visible only on the lower time frame which tends to last for short term and some are visible only on the high time frame which tends to last longer.

Understanding the basic structure of Support and Resistance (and the many factors that come along) will help you in making better entry/exit points in your trading. If your new to the trading game consider practicing on a paper trading account(available for free on TradingView) as it uses real market data. Also if you enjoyed this lesson consider leaving a BTC tip here: 19qTMkmH53mJBB4rx7ZcKKz3yGuTM6AACz