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All about Support and Resistance

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Table of Contents

1 2 3
What Is Support Levels Of Support And Types Of Support
And Resistance? Resistance Vs Zone And Resistance

4 5 6
Where Is Support And How Strong Support When Do Support And
Resistance Formed? And Resistance Resistance Break

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 01
What Is Support And
Resistance ?
All about Support and Resistance

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What is Support :
● Support, or a support level,
refers to the price level that an
asset does not fall below for a
period of time. An asset's
support level is created by
buyers entering the market
whenever the asset dips to a
lower price.

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What is Resistance :
● A Resistance, or a Resistance
level, is the price at which the
price of an asset meets
pressure on its way up by the
emergence of a growing
number of sellers who wish to
sell at that price.

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Flipping Concept :
● These price levels constantly switch their roles from
support to resistance and from resistance to support. A
former resistance, once it has been surpassed,
becomes a support zone in a subsequent downtrend;
and old support, once it has been penetrated, becomes
our resistance zone in a later advancing phase. "

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 Support Turned
into Resistance

Support

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 02
Levels of Support and
Resistance vs Zone
All about Support and Resistance

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 • Support and resistance levels are more detailed and different
levels within the zone. The level is one line, and zone is zone. In
practice, support and resistance and supply and demand
zones are formed from the same source. Support and
Resistance Are areas, not lines.

Why Zone !!!

• Because you’ll face these two problems:

• Price “undershoot” and you miss the trade.

• Price “overshoot” and you assume support and

resistance is broken.

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 Price Undershoot :
• Price "undershoot" and you missed the
trade. This occurs when the market
comes close to the support and
resistance lines, but not close enough.

Then, it reverses back in the opposite

direction. And you miss the trade
because you were waiting for the
market to test your exact
support/resistance level.

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 Price Overshoot :
• Price "overshoots" and assumes
support and resistance are broken.

This happens when the market breaks

support and resistance levels and you
assume they're broken. Thus, we trade
the breakout but only to realize it’s a
false breakout. This type of price
action is called "upthrust and spring."

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So, how do you solve these two problems?
• It’s Simple, draw Support and Resistance zones in the chart, not lines.

How to draw Support and

Resistance zones!
A two-step process to find the Support Resistance Zone:
Step 1 : Switch to a line chart and mark the line with the rejections.

Step 2 : Once again, Switch to the candlestick chart, mark the high or low of
the candle near the marked line, and make the zone

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 Step 1 : Switch to a line chart and mark the line with the rejections.

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 Step 2 : Once again, Switch to the candlestick chart, mark the high or low
of the candle near the marked line, and make the zone

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 03
Types Of Support And
Resistance
Technical Analysis of Stocks

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Types Of Support And Resistance

01 02 03

Dynamic
Horizontal (moving Trend Line
S/R Average) S/R
S/R

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 Horizontal

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Dynamic (moving Average)

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 Trend line

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 04
Where Is Support And
Resistance Formed?
All about Support and Resistance

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1. The first point of support in any time frame is the prior bar’s low.

2. The first point of resistance in any time frame is the prior bar’s
high.

3. The secondary points of support and resistance are swing high

and swing low.

4. Fibonacci retracement.

5. MA and trend line

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 1. The first point of support in any time frame is the prior bar’s low.

2. The first point of resistance in any time frame is the prior

bar’s high

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 3. The secondary points of support and
Resistance resistance are swing high and swing
low.

Resistance
Support

Support

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 Fibonacci retracement
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 05
How Strong Support
And Resistance
All about Support and Resistance

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There are a number of factors that should be considered in determining how
significant or strong the support or resistance level will be. These factors are as
follows :

The number of occurrences : The initial retracement to the area is strong.

Volume : The higher the relative volume is at a particular price level, the more likely it
is that the price level will become significant support or resistance.

How did the price leave the level : The greater the price movement away from a
zone, the more out of balance supply and demand are in that zone. A large order is
placed by a professional trader.

How much time did the price spend at the zone : The less time the price spends at a
zone, the more out-of-balance supply and demand are at the price level.
professional trader enters aggressively When prices retrace and test the level in the
future,

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 06
When Do Support And
Resistance Break
All about Support and Resistance

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1. Support tends to break into a downtrend.

2. Resistance tends to break into an uptrend.

3. Support and resistance tend to break when there is a tight

range at the support and resistance levels.

4. The more frequently tested level of support and

resistance is weakening this level and breaking the level.

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 1. Support tends to break into a downtrend.

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2. Resistance tends to break into an Up trend.

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3. Support and resistance tend to break when there is a tight
range at the support and resistance levels.

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 4. The more frequently tested level of support and resistance
is weakening this level and breaking the level.

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