With Jacob Canfield

What Will You Learn Today?

• What support and resistances are
• How to trade them
• 5 Key Tips For Using
Support/Resistance
• Live Q&A With Examples
 Support & Resistance
Why is Support and Resistance so Important?

Represent significant turn around

points in the market and mark areas of
Supply/Demand In the markets
 Definition of a Support

A support is a level in which the price

will stop dropping due to an increase in
demand.
Example of a Support
 Definition of a Resistance

A resistance is a level in which the price

will stop rising due to an increase in
supply.
Example of a Resistance
What can act as a Support or as a Resistance?
➢ Moving averages
➢ Fibonacci retracement levels
➢ Prior price action levels
➢ Pattern formations
➢ Buy and Sell walls
➢ VPVR
➢ VWAP
➢ Daily, Monthly, Weekly, Annual, Quarterly, Hourly
Opens/Closes
 What is a Support and Resistance flip?

➢ A support and resistance flip is when old support

becomes new resistance or when old resistance becomes
new support.

➢ It is commonly referred to as an “S/R flip”

Example of an S/R flip
 How do I trade Support zones?

➢ One popular method of trading

support zones is by entering on Entering on confirmation:

confirmation.

➢ Waiting for a zone to prove it will

hold as support is critical; as if
your entries are placed at support
and it doesn’t hold, you will be
incurring a loss and or risk having
your stop loss activated.
Why would I not put an order right at a Support zone?
Not entering on confirmation:
➢ As shown by AMB/BTC, waiting
for confirmation of the support
holding is critical.

➢ We can see it held the 1600 level

twice previously, and had you
placed buys at the 1600 after the
fact, you would’ve incurred a
loss and or had your stop loss
hit when it retested that zone
the third time.
 How do I trade Break-outs?
Entering on confirmation after a break-out:
➢ In this example on ETH/USD, we can see
price finds initial resistance at the red box on
the left.

➢ After running sideways underneath

resistance, price eventually breaks up above
resistance as shown by the yellow box in the
middle.

➢ Once price starts to correct, we would look

to enter near the green box on the right as
we want to see old resistance become new
support.

➢ If price holds the green box, it would confirm

the S/R flip, and we can then enter the trade.
Had we done that here, we would’ve made
50-60%.
 How do I trade Break-outs?
In this example on ETH/USD, we can see
price finds initial resistance at the red box on
the left.
After running sideways underneath
resistance, price eventually breaks up above
resistance as shown by the yellow box in the
middle.
Once price starts to correct, we would look
to enter near the green box on the right as
we want to see old resistance become new
support.
If price holds the green box, it would confirm
the S/R flip, and we can then enter the trade.
Had we done that here, we would’ve made Entering on confirmation after a break-out
50-60%.
 How do I trade Resistance zones?
➢ One popular method of trading resistance Selling on confirmation:
zones is by selling on confirmation.

➢ Waiting for a zone to prove it will hold as

resistance is critical; as if it doesn’t, you risk
selling too early and could potentially be
missing out on further percentage gains.

➢ As shown here by ETH/USD, we see one wick

rejection, sideways consolidation, another
retest up into the white box, right into
another wick rejection.

➢ After the second wick rejection, we would sell

out for a profit as the zone has confirmed it
will act as resistance.
 How do I trade Resistance zones?
One popular method of trading resistance Selling on confirmation:
zones is by selling on confirmation.

Waiting for a zone to prove it will hold as

resistance is critical; as if it doesn’t, you risk
selling too early and could potentially be
missing out on further percentage gains.

As shown here by ETH/USD, we see one wick

rejection, sideways consolidation, another
retest up into the white box, right into
another wick rejection.

After the second wick rejection, we would sell

out for a profit as the zone has confirmed it
will act as resistance.
 How do I trade Break-downs?
➢ In this example on ICX/BTC, we can see price Entering on confirmation after a break-down:
was holding support on this green box on
the left.

➢ However, after price began to decline, we

eventually saw this support break as shown
by the small yellow box in the middle.

➢ Shortly after breaking below the prior

support zone, price moves up to retest it as
new resistance, and we see price get swiftly
rejected confirming the S/R flip.

➢ If we wanted to buy ICX lower, we would

close our position out after the rejection and
look to enter lower. Had we done that here,
we would’ve avoided an additional 12% loss.
 How do I trade Break-downs?
Entering on confirmation after a break-down:
In this example on ICX/BTC, we can see price
was holding support on this green box on
the left.
However, after price began to decline, we
eventually saw this support break as shown
by the small yellow box in the middle.
Shortly after breaking below the prior
support zone, price moves up to retest it as
new resistance, and we see price get swiftly
rejected confirming the S/R flip.
If we wanted to buy ICX lower, we would
close our position out after the rejection and
look to enter lower. Had we done that here,
we would’ve avoided an additional 12% loss.
 An example of taking a Short on a Break-down:
Entering a Short on confirmation after a break-down:

➢ In this example on XBT/USD, one

could enter a short position after
confirmation of old support
becoming new resistance.

➢ Had you taken shorts at either of

the red X’s, you could’ve made a
decent profit on each depending
on how much leverage you used.
 An example of taking a Short on a Break-down:
Entering a Short on confirmation after a break-down:

In this example on XBT/USD, One

could enter a short position after
confirmation of old support
becoming new resistance.

Had you taken shorts at either of

the red X’s, you could’ve made a
decent profit on each depending
on how much leverage you used.
 What is meant by Daily/Weekly/Monthly
Support & Resistance?
➢ Drawing Major Support and Resistance zones Identify M/W/D S/R Levels/Zones
from higher time frames first can help
eliminate the noise of lower time frame levels

➢ Monthly levels where price found a reversal

is a great place to start and then zoom in to
Weekly and Daily levels afterwards

➢ Daily and Weekly levels can be hidden by

Monthly levels just as Daily levels can be
hidden by Weekly levels

➢ After the second wick rejection, we would sell

out for a profit as the zone has confirmed it
will act as resistance.
 Daily/Weekly/Monthly Support & Resistance

You can clean this up by identifying zones

➢ As you can see it can become very messy

and hard to interpret what is on the chart

➢ This can be remedied by identifying clear

zones where there are multiple levels present
in a small area

➢ This way the overlap from a Monthly or a

Weekly can be identified as one clear zone of
Support or Resistance
 What else should I know about Support and
Resistance?
➢ Support and Resistance are not exact numbers; they are
more generalized “zones”

➢ Support and Resistance zones on higher time-frames are

often more reliable then those on smaller time-frames.

➢ Support and Resistance are not limited to just price

action; they occur on indicators like the RSI as well.
 Using Support/Resistance with a Stop Loss
➢ When using a stop loss on a ‘long’ trade, meaning you
think the price will go up, we don’t place our stop
directly at a support level.

➢ Instead, you place it BELOW the support level so that

you don’t exit the trade prematurely.

➢ If in a short, you place your stop loss ABOVE the

resistance level to not get taken out prematurely.
 Key Tips For Support and Resistance?

➢ Support and Resistance can be very ‘obvious’

zones that we’ll often see break to ‘trap’
people into being on the wrong side.

➢ This is why we WAIT for confirmation of the

level to hold before entering a trade.
 KEY TIP #1
➢ The More Times A Support Or Resistance Is
Tested, The WEAKER It Becomes
➢ Reason: They are supply and demand zones
and when they are tested multiple times,
they run out of buying and selling pressure.
 KEY TIP #2
➢ Higher lows INTO resistance usually result in
a breakout. (Ascending triangle formation.)

➢ Lower highs into support usually result in a

break down. (Descending triangle formation)
 KEY TIP #3
➢ Don’t place your stop loss at obvious
support and resistance levels.
➢ Place them a good distance away so that
you don’t get your stop loss hunted.
➢ You can also wait for a candle CLOSING
before manually closing your trade.
 KEY TIP #4
➢ Consolidation against support and resistance
usually results in a breakout / breakdown.
➢ Supports have higher probability to break in
a downtrend.
➢ Resistance have higher probability to break
in uptrends.
 KEY TIP #5
➢ You’re going to get the best risk/reward by
shorting resistance and longing support.
➢ Trading mid-range will result in much lower
risk/reward on your trades.
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