Recently, I saw beginners asking about resistance levels and support levels again, so I might as well organize my understanding.

To put it simply, a resistance level is the "ceiling" that the price might encounter when rising, which can easily reverse and fall back; a support level is the position where the price might "touch" when falling, often stopping the decline. These two concepts seem simple, but if used well, they can help you avoid many pitfalls.

What many people don't realize is that resistance and support levels are not actual lines that exist in reality, but rather positions where the bearish force is strong and the bullish force is weak. In other words, they are virtual lines on the candlestick chart, representing market participants' psychological expectations.

So how are these levels formed? I’ve summarized a few common situations. First are moving averages, which help facilitate upward or downward movements. When the market is rising, moving averages act as support levels; when falling, they become resistance lines. For example, the 5-day moving average—when the price touches it, it may rebound, but if it breaks below, that line becomes a new resistance level.

Next are highs and lows. When the candlestick price reaches previous highs or lows, it often touches areas of high trading volume, which can form new resistance and support levels. The third are gaps, which are jump phenomena. If one day’s lowest price is higher than the previous day’s highest price, or vice versa, a gap forms—a blank area with no trading volume—this area can serve as support or resistance.

Another type involves ascending and descending channels. An ascending channel consists of two parallel lines, with the price oscillating within and gradually rising. The upper boundary acts as resistance, and the lower boundary as support. The price moves back and forth within the channel, gradually climbing. The principle for a descending channel is completely opposite.

An important point here is that support and resistance levels can switch roles. When the price breaks below a support level, that support becomes a new resistance level, and vice versa. So you shouldn’t rigidly stick to a specific level; you need to judge flexibly.

In practical trading, I usually determine support levels based on moving averages, previous highs and lows, and gaps. If multiple candlesticks are repeatedly blocked during a gradual rise, or repeatedly supported during a continuous decline, I connect these points to form future support and resistance levels.

Ultimately, understanding resistance and support levels boils down to understanding market psychology. Usually, when the price hits support, it won’t fall further; when it hits resistance, it won’t rise further. But this is not absolute; the key is to be sensitive to market trends and have some investment knowledge. Otherwise, entering the market blindly will only lead to losses.

Finally, I want to say that entering the market without investment knowledge is the most dangerous thing. To earn profits through trading, you must first master these basic concepts, learn to read candlesticks, and understand how support and resistance levels change. This is an essential course for beginners.