loading...
The invisible walls of price - where supply meets demand
Support and resistance are price levels where supply and demand forces converge, creating "walls" that price tends to bounce off of. They're not exact prices - they're zones where buying or selling pressure is concentrated.
These levels form because traders have memory. If price bounced at $50,000 before, traders remember. Some set limit orders there. Others watch for the level and jump in. This collective behavior creates a self-fulfilling prophecy - the more traders watch a level, the more likely it is to work.
A price level where buying pressure exceeds selling pressure, causing price to "bounce" higher.
Support Holds R Resistance A price level where selling pressure exceeds buying pressure, causing price to reject lower.
Why It Works Support and resistance work because of trader psychology and market mechanics:
Traders remember where price turned before. If BTC bounced at $60,000 twice, traders expect it to bounce again. They place limit orders there, creating actual demand at that level.
At previous highs, traders who bought near the top are underwater. When price returns to their entry, many sell to "break even." This selling creates resistance at previous highs.
The more traders watch a level, the more likely it works. If everyone expects support at $50,000, many will buy there - creating the very support they expected.
Once broken, support becomes resistance and resistance becomes support. Those who bought at old support are now underwater and want to sell to break even - creating new resistance.
Fixed price levels from previous highs, lows, or consolidation zones. Most common and reliable type.
Diagonal support/resistance connecting swing highs or lows. Dynamic levels that move with time.
Psychological levels like $50,000, $100,000. Human bias toward round numbers creates natural S/R.
Dynamic S/R from popular MAs (20, 50, 200). Price often bounces off these in trending markets.
Retracement levels (38.2%, 50%, 61.8%) based on prior moves. Self-fulfilling through widespread use.
Zones where large orders were executed. Often visible in volume profile or as consolidation before big moves.
The more times a level is tested, the weaker it gets — not stronger. Each test absorbs demand (at support) or supply (at resistance). The third or fourth test of a level is more likely to break through than the first.
The Academy teaches this concept through structured lessons with real chart examples.
Join Academy →