Support and Resistance: The Foundation of Trading Strategy

When it comes to reading price charts, two concepts dominate every trader's playbook—support and resistance levels.

Support is that price floor where buyers consistently step in. Every time the asset drops to this zone, demand kicks in and prevents further decline. Think of it as a safety net.

Resistance works the opposite way. It's the ceiling where sellers emerge en masse. Whenever price approaches this level, selling pressure builds up, capping the upside.

Why does this matter? Because these levels aren't random. They're born from historical price action where the market repeatedly bounced or reversed. Traders worldwide watch these same levels, creating self-fulfilling patterns.

Pro tip: When support breaks down, it often flips into new resistance. Same story in reverse—broken resistance becomes support. That's how momentum builds in both directions.