In short
- Support — a zone where buying has stopped falls before.
- Resistance — a zone where selling has stopped rises before.
- Broken levels often flip roles.
How to find levels
- Previous swing highs and lows — the clearest source of levels.
- Round numbers — 1.2500, 1.3000 and other "big figures".
- Previous day's and week's high and low — watched by many short-term traders.
- Areas of congestion — where price spent a long time trading sideways.
Start on a higher timeframe (daily or 4-hour) and mark only the most obvious levels. Too many lines make a chart useless.
Role reversal
When resistance breaks, it often becomes support on a pullback — and vice versa. Many trend-following entries are built on this "break and retest" pattern.
Trading around levels
| Approach | Entry | Stop-loss |
|---|---|---|
| Bounce | Near support in an uptrend or range | Just below the support zone |
| Breakout | On a close beyond the level | Back inside the previous range |
| Retest | On a pullback to the broken level | Beyond the retested level |
Common mistakes
- Placing stops exactly on a level, where they're easily hit
- Treating every minor swing as a key level
- Ignoring the bigger trend
Frequently asked questions
Are support and resistance exact prices?
Think of them as zones rather than single prices. Price often overshoots or falls short by a few pips.
Why do round numbers matter?
Levels like 1.2500 or 1.3000 attract orders and attention, so price often reacts near them.
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