Lesson 4 of 15
Support & Resistance
Support is a price level where buyers are strong enough to prevent the price from falling further. Resistance is a price level where sellers are strong enough to prevent the price from rising further.
These levels are identified by looking at historical price reactions — places where the price reversed or consolidated multiple times.
**Key rules:** - Previous resistance can become new support (and vice versa) — this is called a "flip zone". - The more times a level is tested, the stronger it is considered.
Knowledge Check
7 questions
1.What is Support in trading?
2.What is Resistance in trading?
3.What is a flip zone?
4.How is the strength of a support or resistance level typically determined?
5.If price breaks above resistance and later returns to test it, what does that level typically become?
6.Support and resistance levels are identified mainly by studying:
7.Which statement is TRUE about resistance levels?