Level 3
Support and resistance
By the end of this level you can find and name the areas where price reacts again and again, and you will know how to question whether a breakout is genuine or false.
In this level
- What are support and resistance?Support is an area where falling price has stopped and bounced upward again and again; resistance is where rising price has repeatedly stalled. Both are two faces of the same…
- Identifying the levelsThe simplest way to gauge an area's significance is to count touches: how many times has price come here and reacted? Two touches are a start; three or more strengthen the…
- Role reversalThe most interesting behaviour of support and resistance is role reversal: a broken resistance can act as support on later declines, and a broken support can act as resistance on…
- Breakouts and false breakoutsWhen price closes beyond a support or resistance zone, that is a breakout — the same logic as the trendline break in level 2. But not every breakout holds: if price pushes beyond…