Part Two — Classifying Levels
Chapter 6 — Types of Support & Resistance
Support and resistance is one concept. What follows is not a list of different concepts — it is a list of the different ways traders identify the price levels where the concept may apply.
| Type / definition | Why it matters | Illustrative example | Common mistake |
|---|---|---|---|
| Horizontal — a fixed price area | Repeated reactions are easy to compare | Several Daily closes turn near the same price | Forcing every turn onto one exact line |
| Dynamic — a reference that moves with price | It can organise a trend as conditions evolve | Price repeatedly reacts near a rising reference | Assuming the moving reference guarantees a bounce |
| Trendline — a sloping reference through reactions | It visualises the pace of a trend | Successive higher lows align | Redrawing it until it fits the desired trade |
| Moving average — a calculated average price | Many participants watch it as a dynamic reference | Price reacts near a widely observed average | Using the average without price reaction |
| Psychological level — a round number | Orders often cluster at memorable prices | EURUSD approaches 1.1000 | Treating every round number as automatically valid |
| Previous high — an earlier upward extreme | It records where sellers previously responded | Price revisits last week’s high | Selling before current reaction appears |
| Previous low — an earlier downward extreme | It records where buyers previously responded | Price revisits yesterday’s low | Buying the first touch without confirmation |
| Opening price — where a session or period began | It can anchor intraday sentiment | New York price returns to its open | Using every open from every timeframe |
| Weekly high — the week’s highest price | It is a visible higher-timeframe reference | A new week retests the prior weekly high | Ignoring the broader weekly structure |
| Weekly low — the week’s lowest price | It can frame a significant boundary | Price approaches the prior weekly low | Assuming the low cannot break |
| Monthly high — the month’s highest price | It may define a major external boundary | Price revisits a multi-month extreme | Using an excessively precise hairline |
| Monthly low — the month’s lowest price | It may organise long-term structure | A decline reaches the previous monthly low | Entering before a reaction develops |
| Supply area — sustained selling previously emerged | It identifies an area of prior seller control | A sharp decline began from a narrow consolidation | Labelling every bearish candle as supply |
| Demand area — sustained buying previously emerged | It identifies an area of prior buyer control | A strong rally began from a base | Labelling every bullish candle as demand |
| Liquidity level — clustered stops or entries | It can attract price and increase activity | Orders gather beyond an obvious equal high | Assuming a liquidity touch predicts direction |
| Breakout level — a boundary price has left | It marks a possible structural change | Price closes beyond range resistance | Chasing the first fast candle through it |
| Retest level — a broken area revisited | It can reveal whether the role changed | Former resistance is approached from above | Assuming every breakout must retest |
| Range boundary — the edge of contained price | It distinguishes external from internal movement | Price rotates between a clear upper and lower edge | Trading the middle as if it were the boundary |
| Institutional level — a reference used for large transactions | Large activity may leave visible reaction | Price responds around a major periodic reference | Claiming institutional intent without evidence |
| Previous session level — prior high, low, or close | Later sessions often reference it | London approaches the Asian session high | Using the reference without session context |
| Asian session high/low — Asian range extremes | London and New York may react around them | London tests the Asian low | Treating a test as an automatic reversal |
How to use this list
Do not put all twenty-one on a chart. Choose a small number you understand deeply, and give the most weight to levels where several independent references agree — for example, a previous weekly high that is also a round number and a prior session extreme. Confluence is not about quantity of lines; it is about independent agreement.
Key concepts
- Many references can suggest a level
- Reaction and context validate the reference
- Confluence means independent agreement
Practical example
A weekly high aligned with a round number deserves observation, but still requires reaction and confirmation.
Common mistake
Covering a chart with every possible type of level.
Knowledge check
Check your understanding
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