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Chart Patterns

Support and Resistance

Price levels where buying (support) or selling (resistance) pressure historically prevents further movement.

What are Support and Resistance?

Support is a price level where buying interest is strong enough to prevent the price from falling further. Resistance is where selling pressure prevents the price from rising further.

How to identify them

  • Previous highs and lows: the most basic form of S/R
  • Round numbers: $50, $100, $200 often act as psychological S/R
  • Moving averages: the 20, 50, and 200 MAs act as dynamic S/R
  • Volume profile: high-volume price levels become S/R

Key principle

When support breaks, it often becomes resistance (and vice versa). This "role reversal" is one of the most reliable patterns in technical analysis.

Related Terms

Breakout

When price moves above resistance or below support with increased volume, signaling a potential new trend.

Consolidation

A period where price trades in a tight range, indicating a pause before the next directional move.

Fibonacci Retracement

Horizontal levels at key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%) that identify potential support and resistance.

Hammer / Shooting Star

Single-candle reversal patterns: a hammer signals bullish reversal at lows, a shooting star signals bearish reversal at highs.

Market Structure

The pattern of higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend) on a chart.

Supply and Demand Zones

Price areas where imbalances between buyers and sellers caused sharp moves: stronger than traditional support/resistance.