Support and resistance are one of the first things learned in trading.
And yet they are also one of the most common traps.
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What is support and resistance
Support = area where the price stopped falling in the past
Resistance = area where the price stopped rising in the past
They are places where:
someone was buying significantly
or sold significantly
They are not lines.
They are zones.
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Why do they work
They work because:
many people remember them
many traders react to them
liquidity is being created there
When everyone is watching there, something usually happens.
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But why do they often fail
Because:
most people expect the same reaction
places stop-loss in the same spot
enters too early
And where are a lot of stop losses? 👉 There is liquidity.
And where is the market going? 👉 There, where there is liquidity.
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Most common mistake of beginners
sees support
enters long
place stop-loss just below it
the market takes it
and only then turns
Support was not wrong.
The timing was wrong.
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How to better view S/R
Try:
perceive support and resistance as an area, not as a line
wait for the market reaction, not guess the direction
watch what the price does in the zone, not just where it is
combine with liquidity, not in isolation
Support is a matter of:
> "What will the market do here?"
No:
> "Now it MUST grow."
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When is a breakout suspicious
Watch out when:
breakout is fast and aggressive
immediately returns back
missing continuation
That's often not a breakout.
That's liquidity collection.
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Final thought
Support and resistance:
are not a guarantee
are not a signal
are context
Those who use it mechanically,
it becomes predictable.