Module 5: Support, Resistance, and Key Levels

Support and resistance are the most fundamental concepts in technical analysis. They represent price levels where buying or selling pressure historically concentrates.[^8]

Support

A support level is a price area where demand is strong enough to prevent further decline. Buyers step in at this level, creating a "floor" for price. The more times price bounces off a support level, the more significant it becomes—but each test also weakens it.[^8]

Resistance

A resistance level is a price area where supply is strong enough to prevent further advance. Sellers step in at this level, creating a "ceiling" for price.[^8]

How to Draw Key Levels

• Use zones, not lines—support and resistance are areas, not exact prices.[^8]
• Identify areas where price has repeatedly reacted (bounced, reversed, or consolidated).
• Give more weight to levels that have been tested on higher timeframes (daily, weekly).
• Look for areas with multiple touches—at least 2-3 clear reactions at the level.[^6]
• Round numbers (e.g., $100, $150, 1.3000 in forex) often act as psychological support/resistance.

Support Becomes Resistance (and Vice Versa)

When price breaks through a support level, that former support often becomes new resistance. When price breaks through resistance, that former resistance often becomes new support. This "role reversal" is one of the most powerful concepts in trading.[^6][^7]