I just noticed that many people are still confused about support and resistance—what exactly are they, and why are they so important in trading? Honestly, if you understand support and resistance well, it’s like you’ve already armed yourself more than halfway, because even just using this tool alone can help you build your own trading system.

Support and resistance refers to trying to predict where the price will stop. You use technical chart tools to find the zones that are the best places to enter trades. Simply put, support is the price level where the price will stop falling and then reverse upward. Resistance is the price level where the price will stop rising and then break downward. You need to understand this well, because strong support and resistance will be tested many times with massive trading volume. And once they get broken, strong support turns into strong resistance—vice versa as well.

From an economic perspective, prices move up and down because of buy-and-sell demand. When selling pressure is stronger than buying pressure, the price drops until it reaches a point where buying demand is balanced—this is support. Conversely, when buying pressure is stronger than selling pressure, the price rises until it reaches a point where selling demand is balanced—this is resistance.

But from a psychological perspective, support and resistance are points that market participants collectively agree on. For example, when the price falls to a certain level, people who bought earlier won’t hesitate to buy more. Those who are Short will quickly buy back, and those who don’t have a position yet see it as a good opportunity to enter long. This brings in a lot of buying pressure, which creates a strong support level.

There are several ways to identify support and resistance. Start by drawing trendlines (Trendline) through the highest or lowest points that the market has made. Use round numbers (Round Number) because they have psychological effects—for example, a price of 100 looks much more expensive than 99. Use moving averages (Moving Average), which can act as support in an uptrend or resistance in a downtrend. You can also use Fibonacci Retracement levels, based on the golden ratio percentages 23.6%, 38.2%, 61.8%, and 78.6%, to find likely rebound points. And don’t forget about the Window Gap, which is a price gap where no trading takes place—it often turns into strong support or resistance.

Once you find support and resistance, there are three main strategies. If the price is moving in a range (Sideway), buy at support and sell at resistance. When the price reverses—such as in an uptrend where it hits resistance, sell; in a downtrend where it hits support, buy. And when the price breaks out through support and resistance with a large amount of volume, the old resistance becomes new support, or the old support becomes new resistance.

But be careful: don’t sell in an uptrend or buy in a downtrend just because price has touched support and resistance. “Trend is your friend” is still always true. Be cautious when trading on support and resistance levels that have been tested for a long time, because there’s a chance that a new trend is about to form. The most important thing, too, is False Breakout—where price breaks through support or resistance and then comes back. This can usually be seen from thin trading volume, so you should always set stop-loss points.

In summary, support and resistance are tools that help us see the price clearly, but they must be used together with good risk management and patience. The more you practice, the more skilled you’ll become. Go take a look at real charts—then you’ll understand much more.