Support and resistance lines

On this page you can find articles on support and resistance lines. These articles complement the free course «Horizontal levels in trading». Support and resistance lines are the basis of plotting horizontal levels, since the use of two lines (from the upper / lower border of the candle shadow to the border of the candle body at the point of market reversal from the bottom-up or vice versa) form the price zone which is called level. Horizontal support and resistance lines work on all timeframes without exception, but first of all you should plot them on the Daily timeframe since the strongest trends are formed just on this timeframe.

Traders apply them by drawing levels to determine the trend direction, market entry and exit points, they also serve as the basis for profit and risk calculation before entering the market, so they help follow risk and money management rules. So support and resistance play an important role in a trader’s trading plan. Breakout and pullback trading strategies can be applied when you understand and use three main properties of horizontal levels:

  • The first property indicates the direction to trade after breaking through the nearest level.
  • The second property implies that the market is more likely to bounce off the horizontal level than it will break it through and move further in the breakout direction.
  • The third property suggests how levels will work after the market breaks one of them – support sometimes turns into resistance and resistance into support. It’s reflecting property.

You can learn how to trade not only on the Daily timeframe (where support and resistance lines work the best) but also on smaller timeframes, where breakout and pullback trading tactics give better results due to the increased reward-risk ratio and the number of trading opportunities which is more than on the Daily timeframe.

You can get Levels indicator that was created by the authors of the OptionClue project. It automatically plots levels on any timeframes that saves you time and gives clear market marking that is needed for profitable long-term trading.