Strong Support And Resistance Levels

Strong support and resistance levels are key price levels in a financial market that have demonstrated a significant ability to prevent the price from moving beyond that level. These levels are often considered important because they indicate areas where traders and investors are willing to buy or sell an asset, respectively.

The strength of these levels can be measured by the topics below:

1) Number of times the price reaches the zone

One of the indications of a strong support or resistance level is how many times the price has failed to break through or bounce back from that level. As much as the market reaches these levels and comes back, the more valid, strong, and reliable they are. Generally speaking, the support and resistance levels remained for a longer time in history, are stronger levels. The stronger the support or resistance level, the more likely it is to hold in the future, however, it is important to note that just because a resistance level has been touched multiple times, it does not guarantee that it will hold in the future. There are times when the resistance level may eventually break, and this could happen for a variety of reasons.

2) The volume of trading activity

The volume of trades is an important metric in technical analysis, as it can provide insights into the strength of a support or resistance level. If the price of an asset is approaching a resistance level, traders and investors will typically pay close attention to the volume of trading activity to determine the level of selling pressure that is present at that level. Higher trading volume near a resistance level indicates that there are many traders and investors who are willing to sell at that level, creating a stronger resistance zone.

On the other hand, if the price of an asset is approaching a support level, high trading volume can indicate a significant buying interest at that level, which can create a stronger support zone.

AAPL (Apple Stock), Daily Chart (2011 - 2012)

3) Duration of time at which the price stayed at that level

If the length of time that the price spent near a support or resistance zone before either breaking through it or rebounding back from it, the level can be considered as a stronger level. For example, the duration of time that the price spends near a resistance level is an important factor in determining its strength, as it provides insight into the number of traders and investors who are willing to sell at that level. The longer the price stays near the resistance level, the more traders and investors may become aware of it, which can increase the likelihood of selling pressure and create a stronger barrier for the price to move above and break the resistance zone.

It is important to remember that no resistance or support level is infallible, and there are times when a strong level may eventually break

Even strong support or resistance can break! This can happen due to a variety of factors, such as changes in market conditions, unexpected news, or shifts in investor sentiments, emotions, and analyses. Therefore, traders and investors should not rely solely on the strong levels