Support & Resistance: The Foundation of Every Trade
Price memory is real. The zones where buyers and sellers previously fought hardest become the most important areas on any chart.
Why Price Remembers
Markets are driven by human decisions β and humans remember where they were wrong. A trader who bought at a level and got stopped out will sell the moment price returns there, creating resistance. This is why support and resistance levels work.
Identifying Key Zones
A strong zone has three characteristics:
- Multiple touches β price has respected the level at least twice
- Strong reaction β price bounced sharply, not slowly drifted
- High-volume area β lots of trading activity occurred at that level
Role Reversal
When price breaks below a support level, that same level becomes resistance. This is called a role reversal and is one of the most reliable setups in price action trading.
Old floor becomes new ceiling. The market has a long memory.
Round Numbers
Psychological levels β round numbers like 1.2000 or $50,000 β attract orders because traders mentally anchor to them. If your key level is also a round number, it's stronger.