Support and Resistance : The Ultimate Guide to Market Levels 🧱

This article is part of our comprehensive trading course, Master the Art of Trading, designed to guide you step-by-step through market mastery.

“Why does price keep bouncing from certain levels?”
Or…
“Why do breakouts often happen from specific zones?”

The answer lies in two simple, powerful concepts: Support and Resistance – the foundation of every price movement you see on a chart.

In our previous article on Price Action Basics, we learned how price moves in waves and candles reflect trader psychology. Now, let’s dive deeper into the key levels where price reacts again and again – these are known as Support and Resistance (S&R).

A Support Level is a price level where buying interest is strong enough to prevent the price from falling further.

• It’s like the floor for a stock or index.
• Traders expect price to bounce back up from support levels.

🔹 Characteristics of Support:

• Formed after a downtrend or decline.
• Signals that buyers are entering the market.
• Often a previous low or demand zone.

A Resistance Level is a price level where selling pressure prevents the price from rising further.

• Think of it like a ceiling for the price.
• Traders expect price to reverse or struggle to move above this level.

🔹 Characteristics of Resistance:

• Formed after an uptrend or rally.
• Signals that sellers are active at that level.
• Often a previous high or supply zone.

• They are the basis for entry/exit decisions.
• Most trading strategies – whether for scalping, swing, or positional – rely on these levels.
• Breakout and reversals happen around S&R zones.

📍Example:

• A stock breaks below ₹150 (which was acting as support).
• Later, when it rises again, ₹150 now acts as a resistance zone, as previous buyers who are now at a loss might sell to breakeven, or those who missed the breakdown might initiate fresh shorts.

✅ Use these tools and methods to pinpoint reliable Support and Resistance:

• Swing Highs and Lows: Previous peaks and troughs on the chart.
• Pivot Points: Calculated based on previous day’s high, low, and close, often acting as magnetic S&R.
• Round Numbers: Psychological levels like ₹100, ₹500, ₹10,000 often act as natural barriers.
• Previous Reaction Levels: Any price point where the market showed a significant reaction (bounce or reversal) in the past.
• Moving Averages: Can act as dynamic S&R, especially longer-term ones like 50-day or 200-day EMA.
• Trendlines and Channels: Slanted lines that provide dynamic S&R within a trend.

• Range Trading: Buy near support, sell near resistance in sideways or non-trending markets.
• Trend Trading: Wait for a Breakout + retest of the broken S&R level before taking a trade in trending markets.
• Confluence: Combine S&R with volume, candlestick patterns, or indicators for stronger confirmation and higher probability setups.
• Stop Loss Placement: Place your Stop Loss logically just below support for long trades, or just above resistance for short trades.
• Target Setting: Set your target at the next significant S&R level, aligning with your desired Risk-Reward Ratio.

• Support = price floor → acts as a potential buy zone where demand is expected.
• Resistance = price ceiling → acts as a potential sell zone where supply is expected.
• Use them to plan entries, exits, and stop-losses effectively.
• Strong Support/Resistance can act like a magnet or a barrier, often leading to reversals or consolidations.