Support & Resistance Pattern
Support and resistance are key price levels where buying or selling pressure has historically been strong enough to stop or reverse price movement. These levels are fundamental to all technical analysis.
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Key Characteristics
Trading Tips
- ✓Look for multiple touches to confirm levels
- ✓Trade bounces from support (buy) or resistance (sell)
- ✓Watch for breakouts through key levels
- ✓Use levels for stop-loss placement
Signal Strength & Reliability
Support and resistance are the foundation of technical analysis. While not patterns themselves, these levels determine where patterns are likely to form and where breakouts may occur. More touches and higher volume make levels more significant.
Support & Resistance FAQs
Common questions about the support & resistance pattern
Look for price levels with multiple historical touches where price bounced or reversed. Higher volume at these levels indicates more significance. Round numbers, previous highs/lows, and moving averages often act as natural levels.
When support breaks, it often becomes resistance. This 'polarity principle' is fundamental to technical analysis. Previous buyers at that level may sell to break even, creating selling pressure that turns old support into new resistance.
Both strategies can work. Trading bounces (buying at support, selling at resistance) works well in ranging markets. Trading breakouts works better in trending markets. Consider the overall context and your trading style.
Related Patterns
All Chart Patterns
Disclaimer: Wyck provides technical analysis for educational purposes only. This is not financial advice. All trading involves risk. Always consult a licensed financial professional before making investment decisions.
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