Support vs Resistance
Support vs Resistance
Support and resistance are fundamental concepts in technical analysis representing price levels where buying or selling pressure is concentrated. Understanding their differences is crucial for trading.
Comparison Table
| Feature | Support | Resistance |
|---|---|---|
| Location | Below current price | Above current price |
| Pressure Type | Buying pressure | Selling pressure |
| Price Action | Floor where price bounces | Ceiling where price reverses |
| When Broken | Becomes resistance | Becomes support |
| Trading Action | Where traders look for long setups | Where traders look for short setups |
| Psychology | Buyers see value here | Sellers take profits here |
Key Differences
- →Support is a floor; resistance is a ceiling
- →Support attracts buyers; resistance attracts sellers
- →Breaking support is bearish; breaking resistance is bullish
- →Support in uptrends is stronger; resistance in downtrends is stronger
- →Role reversal: broken support becomes resistance and vice versa
When to Use Support
- ✓Identifying buy zones in uptrends
- ✓Setting stop-loss levels for longs
- ✓Finding bounce trading opportunities
- ✓Measuring potential downside
- ✓Defining risk/reward for trades
When to Use Resistance
- ✓Identifying sell zones in downtrends
- ✓Setting profit targets for longs
- ✓Finding short-selling opportunities
- ✓Measuring potential upside
- ✓Planning exit strategies
Common Confusions
- !Support/resistance are zones, not exact prices
- !Levels don't work 100% of the time
- !Strong trends can slice through levels
- !Multiple touches make levels stronger
Apply These Concepts
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FAQs
Common questions about this comparison
Look for: multiple historical touches, round numbers, high volume at that level, previous swing highs/lows, and confluence with other indicators. The more factors align, the stronger the level.
When a level breaks, it often switches roles (support becomes resistance, resistance becomes support). This 'role reversal' or 'polarity' is a key trading concept for finding retest entries.
In ranging markets, many traders do, which is called 'range trading.' In trending markets, traders more often look for long setups on pullbacks to support in uptrends and short setups on rallies to resistance in downtrends. Context matters.