Support, resistance and trend
The backbone of chart reading: where price turned before, and which direction it's going now.
Trend
An uptrend makes higher highs and higher lows. A downtrend makes lower highs and lower lows. Anything else is a range. Your first job on every chart: identify which one you're looking at on the daily timeframe.
Support and resistance
Support is a price area where buying has stopped falls before. Resistance is where selling has stopped rises. They are zones, not exact lines. The more times a level has been tested, and the stronger the reaction, the more it matters.
When price breaks through resistance, that level often becomes support (and vice versa). This “flip” is the basis of many strategies.
How to draw levels
- Start on the weekly chart, then daily. Mark the obvious swing highs and lows — the ones you can see from across the room.
- Don't draw more than 4–6 levels. If your chart looks like a barcode, you're overdoing it.
- Round numbers (1.1000, $100, $50,000) act as psychological levels.
Moving averages as dynamic support
The 20 and 50 EMA (exponential moving average) often act as support in trends. Price above a rising 50 EMA = uptrend bias; below a falling one = downtrend bias. That's the only use of indicators we recommend at the start.
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