Support and Resistance Support and Resistance refer to points, levels, or zones where price has reversed or changed direction in the past. Traders react to these levels and assume the price will respond similarly if the price reaches the same level again. As a result, it often does. In other words, if the price previously reversed at a certain level, there is an above-average chance it will happen again. Support and resistance levels are widely used in profitable trading strategies as entry and exit points. Buying at support and selling at Resistance with a decent Risk Reward Ratio is a common support and resistance trading strategy. Besides horizontal levels, support and Resistance can have many forms and applications. Other factors often used to identify support and Resistance are trend lines, moving averages, and Fibonacci levels. Horizontal Support If the price declines and then changes direction to the upside, the lowest point is referred to as support. The price declined to a low enough level to draw buyers' interest, and therefore the price changed direction. If, after some time, the price reaches the same support level, there is an above-average chance that buyers will step in again. Therefore, horizontal support levels provide buying opportunities.
