What Is Support and Resistance?

Support and resistance are, as Niko puts it, the floors and ceilings of a chart. Draw them badly and every entry, stop and target built on top of them is crooked.

Chad's version is blunt. "I enter my trades where everybody else gets stopped out of their trades."

Why does price keep turning at the same support and resistance levels?

Orders cluster there. Buyers who were happy at a price often buy there again. Traders who missed the first bounce wait for a second chance. Sellers trapped above a level sell to break even when price comes back. Those clusters make price react when it returns.

Niko teaches it the way he does with beginners: "Support is like the floor. And resistance is like the ceiling." Support sits below price, resistance above, and a level can switch roles once it breaks.

What makes a support or resistance level worth trading?

Four rules:

1. It's a zone. Price rarely turns at the exact same tick. Wicks poke through, candles close a little short. Mark the range between the wick extremes and the bodies, not one perfect line. Niko again: "It's not just one price point."
2. At least three distinct touches. Price touches the zone, moves away, comes back, moves away, comes back again. A clump of candles sitting on a level is one touch, not five.
3. Higher timeframes outweigh lower ones. A zone that has held on the daily and 4 hour carries far more orders than one visible only on the 5 minute.
4. Broken levels flip. Once resistance breaks and price retests it from above and holds, it becomes support, and the reverse for broken support.

Everyone sees the obvious zones, so stops pile up just beyond them. That's why price so often sweeps a level before reacting... the liquidity sweep. Anyone worth their salt has watched it a hundred times.

What does a support and resistance trade look like with numbers?

Illustrative numbers only. On the daily, SOL has a support zone from $130 to $135 with three distinct touches over two months. Resistance sits at $150 to $152.

• On the 1 hour, price sweeps to $129.80, just under the zone, and closes back inside at $134. Entry: $134.
• Stop: $129.20, beyond the sweep low. Not under the zone's edge at $130, where the swept stops just were, and not at an arbitrary percentage. Distance: $4.80.
• Size: 1% of a $10,000 account is $100; $100 divided by $4.80 is 20.8 SOL; round down to 20 SOL, about $2,680 of exposure.
• Target: the bottom of resistance at $150, $16 away, for a ratio of about 1:3.3.

How do we find our support and resistance levels?

The simplest way there is. As Chad puts it: "You're just gonna look to the left."

Levels feed straight into the equal lows strategy and top-down analysis. We mark the higher timeframe zones first, because higher timeframes rule the chart, then look for lower timeframe structure inside them. Charts stay nearly naked: two or three active trendlines and one or two zones are plenty. Plenty of traders bury their charts in lines because it looks like work.

Where do most traders get burned on support and resistance?

One precise line with the stop tucked just under it. That's exactly where everyone else's stops sit, so a routine sweep takes the trade out before the level does its job. Draw the zone, wait for the reaction, and put the stop beyond the sweep extreme, where the level has clearly failed.

The second mistake is giving every level equal weight. A 5 minute support just above a big 4 hour zone is likely to break on the way to the bigger one. Count touches, check the timeframe, and trade the zones with the most history.

What support and resistance should you mark on your next chart?

Delete every line. Look left on the daily and mark only zones with three clear touches. Two or three left, right? That's the point.

Learn to mark levels in how to read crypto charts and crypto trading strategies, then see how a level becomes a stop and a size in crypto position sizing. Related terms: trendline and market structure.