Support and resistance

The floors and ceilings of a chart

Free lesson

Find support and resistance levels, understand breakouts, and plan a trade with a stop and a reward-to-risk ratio.

Support is a price area where buying has repeatedly stopped falls.
Resistance is a price area where selling has repeatedly stopped rises.
Breakouts on high volume are more reliable than quiet ones.
Broken resistance often becomes support — but levels can fail, so always use a stop.

Entry 120, stop 114 → risk 6 per coin.

Target 138 → reward 18 per coin.

Reward : risk = 3 : 1. You can be wrong twice and right once and still be ahead.

Support is...

A level where buyers have usually stepped in - Support is a floor: buying has stopped declines there before.

Entry 50, stop 48, target 56. What is the reward-to-risk?

3 : 1 - Risk 2, reward 6 → 3 : 1.

Which breakout is more convincing?

One on a big jump in volume - Volume shows real participation behind the move.

Welcome back to class. Today: support and resistance, the floors and ceilings of every chart.

Here is a market moving sideways. Watch how price keeps turning around at the same two areas.

Down here, buyers kept stepping in near 100. That floor is called support.

Up here, sellers kept taking profit near 118. That ceiling is called resistance.

Then price broke through the ceiling, and volume jumped. A breakout with strong volume is more convincing.

Let's turn this into a plan. Buy the breakout at 120, with a stop below the old ceiling, at 114.

Your risk is 6 per coin. If the target is 138, your reward is 18. That's a reward to risk of 3 to 1.

Quick question. When resistance breaks, what often happens to it?

It often becomes the new support. Old ceilings become new floors. But not always, so always use a stop.

Let's recap.

Next lesson: Volume

Educational information only - not financial advice.