What are support and resistance levels?

Support and resistance levels can help traders gain extra insight into the strength of a price trend. Here we define support and resistance levels, explain how to identify and draw both lines, and more. What is support and resistance?

What happens if a support or resistance level breaks?

When a support or resistance level breaks, the strength of the follow-through move depends on how strongly the broken support or resistance had been holding. With a little practice, you’ll be able to spot potential forex support and resistance areas easily.

How far back should support and resistance levels be drawn?

There is no hard rule on how far back support and resistance levels should be drawn. Younger support and resistance levels are usually more important than older ones, as they represent a fresh price-level where the market had difficulties to break above or below.

How do support levels work in a downtrend?

Support levels indicate where there will be a surplus of buyers. In this way, resistance and support are continually formed as the price moves up and down over time. The reverse is true during a downtrend. In the most basic way, this is how support and resistance are normally traded: Buy when the price falls towards support.