Summary Of Support and Resistance

Notes To Remember:

Support Level: The support level is the point where the price stops falling. The lowest price points lie on a horizontal zone that indicates the probable bottom level of the market.

Resistance Level: Resistance is the opposite of support, it's drawn where the price stops rising. The highest price points lie on a horizontal zone that indicates the probable top level of the market.
Breakout: The breakout happens when the price breaks the presumed support or resistance level and leaps over them.

Fakeout: The fakeout happens when the price breaks support or resistance level for a very short time and then immediately returns back to the previous area.
The Principle of Polarity: In the market when a breakout happens, resistance changes into support level or vice versa. This concept of replacing is called " the principle of polarity"

Depending on the direction of the market, two types of polarity may occur:

Resistance level turns into support (usually happens in up growing direction)
Support level turns into resistance (usually happens in down growing direction)

Frequently Asked Questions

The support is where the price stopped falling and changed into an upward trend. While resistance is the level where the price stopped rising and changed into a downward trend. Usually, support and resistance act as a floor and ceiling for the market.

Depending on your trading strategies and type of trader, you can find support and resistance in every time frame. Generally, the long-term approach shows more strong and more valid levels.

The market falls, and the price goes lower than expected. It may last for a long time, and the price continues its decrease, so a breakout has happened.

The market faces an uptrend and the price goes higher. It may last for a long time, and the price increases, so a breakout has happened.

Support level lay under the market and show where the price felt and then went up. Resistance, as it means, is the level that withstands the upward force of the market. It's placed above the market, and within a time span, the price reached and then fell down.

For drawing support level, draw lines that connect the lowest price points in the specific time frame; on this point, the market is placed above the level. The resistance level is the opposite of support. It connects the price peaks in a specific time frame, so the market is below the level.

Many levels can be found in every time frame and range of views. It depends on your trading strategy, you might choose a lower or higher time frame. However, strong levels can be found in the higher time frames such as daily and weekly.

Yes, they work if you combine them with other tools such as price action, patterns, and economic indicators. Also, you need to consider these levels as an area, not an exact price or value.

Yes, that is an indication of a bullish marker. However, trades should be aware of fakeouts and consider confirmations before entering a trade.

Yes, that is an indication of a bearish marker. However, trades should be aware of fakeouts and consider confirmations before entering a trade.

Both works. The risk of breakouts is fakeouts. The risk of reversals is trading against the recent trade. For both strategies, you need to get confirmation by combining them with other tools such as price action, chart patterns, Elliott wave and etc.