MARKET EXECUTION CORE
Support and Resistance Done Correctly
This lesson explains how support and resistance areas form, why they should usually be treated as zones instead of perfect lines, and how to evaluate reactions, breakouts, retests, and failed breaks. By the end of the lesson, you should be able to identify meaningful support and resistance, distinguish a reaction from a confirmed reversal, and explain whether price is rejecting, accepting, or moving through an important area.
What Are Support and Resistance?
Support and resistance are areas where price has previously reacted or where buying and selling pressure may increase.
Support is an area where price may attract buyers or where sellers may begin taking profit.
Resistance is an area where price may attract sellers or where buyers may begin taking profit.
Support is generally located below the current price.
Resistance is generally located above the current price.
These areas can help traders understand where price may:
• Pause
• React
• Consolidate
• Reverse
• Break through
• Accelerate
A support or resistance area does not guarantee that price will stop.
It identifies a location where the trader should pay closer attention.
- What Is Support?
Support is a price area where downward movement previously slowed, stopped, or reversed.
For example:
Price moves from:
20,200 down to 20,050
At 20,050, buyers enter and price moves back to:
20,150
The area around 20,050 may be identified as support.
Support may form because:
• Buyers consider the price attractive
• Sellers begin taking profit
• Previous buyers defend positions
• Institutions have orders in the area
• Price reached a previous swing low
• The market is reacting to a higher-timeframe level
Support does not mean price cannot move lower.
It means price previously showed a reaction in that area.
- What Is Resistance?
Resistance is a price area where upward movement previously slowed, stopped, or reversed.
For example:
Price moves from:
20,000 up to 20,150
At 20,150, sellers enter and price moves back to:
20,050
The area around 20,150 may be identified as resistance.
Resistance may form because:
• Sellers consider the price too high
• Buyers begin taking profit
• Previous sellers defend positions
• Institutions have orders in the area
• Price reached a previous swing high
• The market is reacting to a higher-timeframe level
Resistance does not mean price cannot move higher.
It means price previously showed a reaction in that area.
- Support and Resistance Are Usually Zones
Beginners often draw support and resistance as one exact line.
Real price movement is rarely that precise.
Price may react:
• A few points above the marked level
• Directly at the level
• Slightly below the level
• Across several candles
• Through the level before returning
Because of this, support and resistance should often be viewed as areas or zones.
Example
Price previously reacted between:
20,040 and 20,060
Instead of marking only:
20,050
The trader may treat:
20,040 to 20,060
as the support zone.
The exact size of the zone depends on:
• The market being traded
• The timeframe
• Current volatility
• The size of the previous reaction
• The structure around the area
A zone should not be made so wide that it becomes meaningless.
- Why Perfect Lines Can Be Misleading
Imagine a trader marks support at exactly:
20,000
Price later reaches:
20,005
and moves higher.
The trader may believe support was never reached because price missed the line by five points.
Another day, price may move to:
19,995
before reversing.
The trader may believe support failed because price temporarily moved below the line.
Both reactions occurred near the same general area.
Treating support as a zone can help the trader avoid expecting impossible precision.
The purpose of the level is to organize price behavior, not predict the exact lowest or highest tick.
- How Support and Resistance Form
Support and resistance may form around:
• Previous swing highs
• Previous swing lows
• Equal highs
• Equal lows
• Range boundaries
• Session highs and lows
• Previous day highs and lows
• Weekly highs and lows
• Major opening prices
• Areas of consolidation
• Breakout points
• Higher-timeframe price levels
Not every visible high or low should be marked.
Too many levels can make the chart difficult to read.
The trader should focus on areas that are:
• Clearly visible
• Connected to meaningful reactions
• Relevant to the current price
• Important on the selected timeframe
- Previous Swing Lows as Support
A previous swing low may act as support when price returns to it.
Example:
Price forms a swing low at:
20,000
Price then rallies to:
20,200
Later, price pulls back toward:
20,000
The trader may watch the previous low as potential support.
Price could:
• React above the low
• Touch the low and move higher
• Wick below the low and recover
• Consolidate around the low
• Break through the low
The previous reaction does not guarantee another reaction.
- Previous Swing Highs as Resistance
A previous swing high may act as resistance when price returns to it.
Example:
Price forms a swing high at:
20,200
Price then falls to:
20,000
Later, price rallies toward:
20,200
The trader may watch the previous high as potential resistance.
Price could:
• React below the high
• Touch the high and move lower
• Wick above the high and return
• Consolidate around the high
• Break through and continue higher
The trader should observe the current reaction instead of assuming the old high must hold.
- Repeated Tests of a Level
A level may become more visible when price reacts there several times.
For example:
Price reaches approximately 20,100 three times and moves lower after each test.
The area may be considered resistance.
Repeated reactions may show that:
• Sellers are active in the area
• Buyers are struggling to move through
• The market recognizes the level
• Orders may be collecting near the area
However, repeated tests can also weaken a level.
Each test may fill more of the available orders.
Eventually, price may break through.
- More Touches Do Not Always Mean a Stronger Level
A common belief is that every additional touch makes support or resistance stronger.
That is not always true.
A level tested repeatedly may become easier to break because:
• Orders at the level are being filled
• Reactions are becoming smaller
• Price is spending more time near the area
• Buyers or sellers are losing control
• Pressure is building against the level
Example
Resistance:
20,100
First reaction:
Price falls 80 points.
Second reaction:
Price falls 40 points.
Third reaction:
Price falls 15 points.
Price is still reacting, but each reaction is becoming weaker.
This may show that buyers are applying increasing pressure against resistance.
- Reaction Strength Matters
Not every reaction from support or resistance is equally meaningful.
A strong reaction may include:
• Large candle bodies
• A close away from the level
• Limited candle overlap
• Increased momentum
• Follow-through
• Price remaining away from the area
A weak reaction may include:
• Small candles
• Long wicks in both directions
• Heavy overlap
• Price repeatedly returning to the level
• Little directional progress
• No follow-through
A trader should evaluate what price does after reaching the area.
- A Reaction Is Not Automatically a Reversal
Price reacting from a level does not mean the entire market direction has changed.
Imagine the market is in a strong bullish trend.
Price reaches resistance and moves 20 points lower.
That movement may be:
• A temporary pullback
• Profit-taking
• A pause
• A lower-timeframe reaction
• The beginning of a larger reversal
The first reaction does not provide enough information to know which outcome will occur.
A reversal generally requires more evidence than one candle moving away from a level.
- What Is Rejection?
Rejection occurs when price trades into or through an area but cannot maintain that price.
Possible rejection characteristics include:
• A wick through the level
• A close back inside the previous range
• Strong movement away from the area
• Failure to remain above resistance
• Failure to remain below support
• Follow-through in the opposite direction
Resistance rejection example
Resistance zone:
20,100 to 20,120
Price reaches:
20,130
The candle closes at:
20,090
Price traded above the zone but closed back below it.
This may show rejection of higher prices.
Support rejection example
Support zone:
19,980 to 20,000
Price reaches:
19,970
The candle closes at:
20,010
Price traded below the zone but closed back above it.
This may show rejection of lower prices.
A rejection still requires context and follow-through.
- What Is Acceptance?
Acceptance occurs when price moves beyond an area and remains there.
Possible signs of acceptance include:
• A candle close beyond the zone
• Multiple candles holding beyond the zone
• A retest that remains on the new side
• Continued structure in the breakout direction
• Price building a new range beyond the level
Resistance acceptance example
Resistance zone:
20,100 to 20,120
Price closes at:
20,140
The next candles remain above:
20,120
Price then continues toward:
20,200
This shows stronger acceptance above the previous resistance.
Support acceptance example
Support zone:
19,980 to 20,000
Price closes at:
19,950
The following candles remain below:
19,980
Price then continues toward:
19,900
This shows stronger acceptance below the previous support.
- Rejection Versus Acceptance
Rejection means price could not maintain movement beyond the area.
Acceptance means price moved beyond the area and remained there.
The trader should compare:
• Where the candle closed
• Whether the next candles remained beyond the level
• Whether price returned immediately
• Whether structure continued in the new direction
• Whether momentum increased or decreased
A temporary wick through a level may show rejection.
A close beyond the level with continued movement may show acceptance.
Neither outcome is guaranteed from the first candle alone.
- What Is a Breakout?
A breakout occurs when price moves beyond a support, resistance, or range boundary.
A bullish breakout moves above resistance.
A bearish breakout moves below support.
Breakouts may happen through:
• Strong displacement
• Several smaller candles
• A news release
• Gradual pressure
• A gap or rapid movement
A breakout should not be judged only by the fact that price touched the other side of a level.
The quality of the breakout matters.
- Strong Breakout Characteristics
A stronger breakout may include:
• A clear close beyond the level
• A large directional candle
• Limited wick against the breakout
• Increased volume
• Follow-through
• Price remaining beyond the level
• A successful retest
• Continued structure in the breakout direction
Bullish breakout example
Resistance zone:
20,100 to 20,120
Price closes at:
20,155
The candle closes near its high.
The following candle moves to:
20,190
Price remains above the resistance zone.
This is stronger evidence of a bullish breakout than a small wick above the zone.
- Weak Breakout Characteristics
A weak breakout may include:
• A small close beyond the level
• A long wick
• Immediate movement back inside the range
• Heavy candle overlap
• No follow-through
• Price repeatedly crossing the level
• A breakout during low volume
• A breakout directly into another major level
A weak breakout may still succeed.
However, it gives the trader less evidence of strong acceptance.
- What Is a False Breakout?
A false breakout occurs when price moves beyond a level but fails to remain beyond it.
For example:
Resistance:
20,100
Price moves to:
20,125
Breakout traders enter long.
Price then closes back below:
20,100
Price continues lower to:
20,020
The move above resistance failed.
A false breakout may occur because:
• Liquidity was resting beyond the level
• Buyers lacked follow-through
• Sellers entered above resistance
• The breakout occurred during unstable conditions
• Price was still inside a larger range
A false breakout is not automatically a signal to enter in the opposite direction.
The trader still needs confirmation and defined risk.
- What Is a Retest?
A retest occurs when price breaks a level and then returns to that area.
The trader watches whether the level:
• Holds from the new side
• Rejects price
• Allows price back through
• Becomes consolidation
• Produces continuation
Bullish retest example
Resistance zone:
20,100 to 20,120
Price breaks above and reaches:
20,180
Price then pulls back to:
20,115
Buyers react and price moves higher.
The previous resistance area may now be acting as support.
Bearish retest example
Support zone:
20,000 to 20,020
Price breaks below and reaches:
19,940
Price then retraces to:
20,005
Sellers react and price moves lower.
The previous support area may now be acting as resistance.
- Support Can Become Resistance
When support breaks, it may later act as resistance.
This is sometimes called a role reversal.
Example:
Support zone:
20,000 to 20,020
Price breaks below and closes at:
19,970
Price later retraces toward:
20,000
Sellers enter and price moves lower.
The area that previously attracted buyers is now attracting sellers.
- Resistance Can Become Support
When resistance breaks, it may later act as support.
Example:
Resistance zone:
20,100 to 20,120
Price breaks above and closes at:
20,150
Price later pulls back toward:
20,120
Buyers enter and price moves higher.
The area that previously attracted sellers is now attracting buyers.
Role reversal does not happen every time.
Price may return through the level or consolidate around it.
- A Retest Is Not Always Perfect
Price may not return to the exact breakout line.
A retest may:
• Stop slightly above the area
• Wick into the area
• Move slightly through the area
• Test only part of the zone
• Occur several candles later
• Never occur
Waiting for an exact price can cause the trader to miss some moves.
Entering too early because a retest might not occur can create poor risk.
The trader needs a consistent rule for what qualifies as a valid retest.
- Price Does Not Always Retest
After a strong breakout, price may continue without returning to the original level.
This often causes fear of missing out.
A trader may chase the move after it has already traveled far from the breakout area.
Chasing may create:
• A larger stop
• Poor risk-to-reward
• Entry near the end of the move
• Emotional decision-making
• Increased chance of entering before a pullback
Missing a move is not the same as losing money.
A trader should not abandon the plan because price did not provide the desired entry.
- Higher-Timeframe Levels Usually Carry More Weight
A support or resistance area on the four-hour chart contains more price history than a small level on the one-minute chart.
Higher-timeframe levels may attract more attention because they are visible to more participants.
Examples include:
• Daily highs and lows
• Weekly highs and lows
• Four-hour swing points
• Major one-hour ranges
• Previous day highs and lows
• Major session extremes
A higher-timeframe level does not guarantee a reaction.
It means the location may be more important than a minor lower-timeframe level.
- Lower-Timeframe Levels Still Matter
Lower-timeframe support and resistance can help traders observe:
• Short-term reactions
• Entry confirmation
• Intraday ranges
• Small consolidations
• Breakout attempts
• Immediate structure
The mistake is allowing every minor level to become more important than the broader chart.
A five-minute resistance area may produce a short reaction while the four-hour market remains strongly bullish.
The trader should understand the hierarchy of levels.
- Too Many Levels Create Confusion
A chart covered with lines can make every movement appear important.
The trader may begin seeing:
• Support every few points
• Resistance every few points
• Conflicting signals
• No clear target
• No clean invalidation
A useful chart should highlight only the most relevant areas.
Before marking a level, ask:
Is the level clearly visible?
Did price produce a meaningful reaction?
Is it relevant to the current price?
Does it matter on the timeframe I am trading?
Would I make a different decision because of this level?
If the answer is no, the level may not need to remain on the chart.
- Fresh Levels Versus Tested Levels
A fresh level is an area price has not revisited since the original reaction.
A tested level has already been revisited one or more times.
Some traders consider fresh levels more meaningful because the original orders may not have been fully filled.
However, freshness alone does not make a level valid.
A fresh level may fail immediately.
A tested level may continue holding.
The trader should evaluate:
• The quality of the original reaction
• The current market structure
• The number of tests
• The strength of each reaction
• The timeframe
• The approach into the level
- How Price Approaches a Level
The movement into support or resistance can provide useful information.
Strong approach into resistance
Price may create:
• Large bullish candles
• Shallow pullbacks
• Repeated higher lows
• Increasing momentum
This may show strong buying pressure against resistance.
Weak approach into resistance
Price may create:
• Small overlapping candles
• Long upper wicks
• Reduced momentum
• Failure to make progress
This may show buyers struggling before reaching the level.
Strong approach into support
Price may create:
• Large bearish candles
• Shallow retracements
• Repeated lower highs
• Increasing momentum
This may show strong selling pressure against support.
A strong approach can lead to a breakout, but it can also create an overextended move that reacts sharply.
The approach provides context, not certainty.
- Compression Into a Level
Compression occurs when price repeatedly moves toward a level with smaller pullbacks.
For example, below resistance, price may create:
• A high
• A small pullback
• A higher low
• Another test
• Another shallow pullback
• Another higher low
Price is pressing against resistance.
This may show that sellers are producing weaker reactions.
Compression may occur before a breakout.
However, it can also fail and reverse sharply.
The trader should wait for the actual outcome rather than assuming the level must break.
- Clean Rejection From a Level
A clean rejection may include:
• Price reaching the zone
• A clear response
• A strong close away
• Limited time spent inside the zone
• Follow-through
• No immediate return
Example
Resistance zone:
20,100 to 20,120
Price reaches:
20,112
A bearish candle closes at:
20,070
The following candle moves to:
20,030
Price does not immediately return to the zone.
This is a cleaner rejection than price producing several overlapping candles inside the zone.
- Messy Price Action Around a Level
Price may remain around support or resistance for an extended period.
This can include:
• Multiple wicks through the area
• Candles closing on both sides
• Heavy overlap
• Frequent direction changes
• No strong movement away
This may show that the market is accepting the area rather than strongly rejecting it.
The longer price remains around a level, the less clear the reaction may become.
A trader should avoid inventing confirmation inside messy price action.
- Support and Resistance Inside a Range
A trading range has:
• Resistance near the upper boundary
• Support near the lower boundary
• A middle area between them
Price may rotate repeatedly between support and resistance.
Beginners often buy near range resistance because price has been moving higher.
They may also sell near range support because price has been moving lower.
This can result in entering directly into the area where price is more likely to react.
Range example
Resistance:
20,200
Support:
20,000
Midpoint:
20,100
Buying at 20,190 means entering near resistance.
Selling at 20,010 means entering near support.
Location matters even when the recent candles appear strong.
- Support and Resistance During a Trend
In a bullish trend:
• Previous resistance may become support
• Pullbacks may react from higher lows
• Buyers may defend broken highs
• Resistance may continue breaking
In a bearish trend:
• Previous support may become resistance
• Retracements may react from lower highs
• Sellers may defend broken lows
• Support may continue breaking
The trader should not assume every resistance level will reverse a bullish trend.
The trader should not assume every support level will reverse a bearish trend.
Trend context changes how levels should be interpreted.
- Dynamic Support and Resistance
Some traders use moving averages, trendlines, or other tools as dynamic support and resistance.
They are called dynamic because the level changes as new price data appears.
Traditional horizontal support and resistance remain at fixed price areas.
Dynamic tools may help organize a chart, but they should not be treated as guaranteed reaction points.
Tick Lab focuses first on understanding actual price highs, lows, ranges, and reactions before adding unnecessary indicators.
- Round Numbers
Round numbers are prices such as:
20,000
20,100
20,500
21,000
These areas may attract attention because they are easy to recognize and remember.
Traders may place:
• Entries
• Stops
• Profit targets
• Limit orders
around round numbers.
A round number alone is not automatically support or resistance.
It becomes more meaningful when combined with:
• Previous reactions
• Market structure
• Session levels
• Higher-timeframe areas
• Strong price behavior
- Support and Resistance Are Not Entry Signals
Marking a support zone does not mean the trader should immediately buy.
Marking a resistance zone does not mean the trader should immediately sell.
Price could:
• React before reaching the zone
• Move directly through the zone
• Consolidate inside the zone
• Sweep the zone before reversing
• Break and retest the zone
• Ignore the zone
A complete trade still requires:
• Directional context
• A meaningful location
• Entry confirmation
• Invalidation
• A logical target
• Acceptable risk
- Stop Placement Around Levels
A stop loss should be placed where the trade idea becomes invalid.
It should not be placed directly beyond a level without considering:
• The width of the zone
• Normal market volatility
• Nearby swing points
• Possible liquidity sweeps
• The entry method
• The strategy rules
For example, placing a stop one point below a 20-point support zone may not give the trade enough room.
However, placing the stop extremely far away may create excessive risk.
The position size should be adjusted to fit the correct stop.
- Targets Around Support and Resistance
Support and resistance may also help identify possible targets.
A long trade may target:
• Previous resistance
• A previous swing high
• A session high
• The upper boundary of a range
A short trade may target:
• Previous support
• A previous swing low
• A session low
• The lower boundary of a range
A target should reflect realistic room for price to move.
Entering directly below major resistance may limit the potential reward on a long trade.
Entering directly above major support may limit the potential reward on a short trade.
- Risk-to-Reward and Level Location
Imagine a trader wants to buy at:
20,180
Major resistance is located at:
20,200
The stop loss is:
20,150
The trader is risking:
30 points
There are only:
20 points
between the entry and resistance.
The trader would be risking 30 points to reach an area only 20 points away.
The trade may offer poor risk-to-reward.
Even if the directional idea is correct, the entry location may be poor.
A trader must consider what stands between the entry and target.
Common Beginner Mistake
“Price reached support, so I bought.”
Support identifies an area where price may react.
It does not guarantee buyers will take control.
Imagine NQ is in strong bearish structure.
Support is located between:
20,000 and 20,020
Price reaches the zone.
A beginner immediately enters long at:
20,015
Price pauses briefly and then breaks below:
20,000
The trade loses because the trader treated location as confirmation.
Before entering, the trader should have asked:
What is the current market structure?
How did price approach support?
Did buyers create a meaningful reaction?
Did a candle close away from the zone?
Was there follow-through?
Where would the long idea become invalid?
Is there enough room to the next resistance?
Support provides a location to observe.
Price behavior determines whether the area is actually being defended.
Practical Example
Imagine NQ is trading inside the following range:
Resistance zone:
20,180 to 20,200
Support zone:
20,000 to 20,020
Midpoint:
20,100
First test of resistance
Price moves from:
20,050 to 20,190
A bearish candle closes at:
20,150
Price then falls to:
20,080
This shows a reaction from resistance.
Second test of resistance
Price returns to:
20,195
The reaction only moves price down to:
20,160
The second reaction is smaller.
Third test of resistance
Price reaches:
20,198
Price pulls back only to:
20,180
Price is creating smaller reactions and remaining close to resistance.
This may show increasing pressure against the level.
Breakout
A bullish candle opens at:
20,185
It closes at:
20,225
The candle closes above the resistance zone.
Follow-through
The next candle reaches:
20,260
Price remains above:
20,200
This provides stronger evidence of acceptance above resistance.
Retest
Price pulls back to:
20,205
A bullish candle closes at:
20,230
The old resistance zone may now be acting as support.
What does the trader know?
Resistance produced several reactions.
Each reaction became smaller.
Price eventually closed above the zone.
The following candle continued higher.
The retest held above the previous resistance.
What does the trader not know?
The trader does not know with certainty that price will continue higher forever.
The trader does not know whether another higher-timeframe resistance area is nearby.
The trader does not know whether price will later return inside the original range.
The level and reaction provide evidence.
They do not eliminate risk.
Knowledge Check
Question 1
What is support?
A. An area where downward movement may slow or react
B. An area where price must move lower
C. A guaranteed long entry
D. The highest price of the session
Answer: A
Question 2
What is resistance?
A. An area where upward movement may slow or react
B. A guaranteed short entry
C. The lowest price of the session
D. A market order
Answer: A
Question 3
Why should support and resistance often be treated as zones?
A. Price always stops at random locations.
B. Price reactions are not always exact to one price.
C. Zones guarantee reversals.
D. Lines cannot be drawn on charts.
Answer: B
Question 4
Which statement about repeated tests is correct?
A. Every additional test guarantees the level becomes stronger.
B. Repeated tests may weaken the available orders at a level.
C. A level can only be tested once.
D. Repeated tests always create a reversal.
Answer: B
Question 5
What is rejection?
A. Price moves beyond an area and remains there.
B. Price trades into or through an area but cannot maintain the price.
C. Price never reaches the area.
D. A trader cancels an order.
Answer: B
Question 6
What is acceptance?
A. Price moves beyond an area and remains there.
B. Price creates one wick through a level.
C. Price touches support once.
D. Price closes inside the same candle.
Answer: A
Question 7
What is a breakout?
A. Price moves beyond a support, resistance, or range boundary.
B. Price remains in the middle of a range.
C. A broker closes an account.
D. Price opens at the same level.
Answer: A
Question 8
What is a false breakout?
A. Price moves beyond a level and continues.
B. Price moves beyond a level but fails to remain there.
C. Price never touches the level.
D. Price forms an inside candle.
Answer: B
Question 9
What is a retest?
A. Price breaks a level and later returns to the area.
B. A trader repeats the same losing trade.
C. Price creates a new daily candle.
D. The market closes for maintenance.
Answer: A
Question 10
Which statement is correct?
A. Support must always create a long trade.
B. Resistance must always create a short trade.
C. Support and resistance provide locations to observe price behavior.
D. A level is valid only when price touches one exact tick.
Answer: C
Question 11
What may indicate stronger acceptance above resistance?
A. A small wick above resistance followed by an immediate reversal
B. Multiple candles remaining above the zone
C. Price repeatedly closing below the zone
D. A bearish candle below support
Answer: B
Question 12
Why can too many chart levels be harmful?
A. They stop the market from moving.
B. They can create confusion and make every movement appear important.
C. They increase contract fees.
D. They change the market’s opening price.
Answer: B
Question 13
Which level will generally contain more market information?
A. A minor one-minute level
B. A major four-hour level
C. A random candle close
D. The current bid price
Answer: B
Question 14
Which statement about a retest is correct?
A. Every breakout must provide a perfect retest.
B. A retest may occur slightly above, inside, or through the original zone.
C. A retest guarantees continuation.
D. A retest can only happen on the daily chart.
Answer: B
Question 15
A range has resistance at 20,200 and support at 20,000. What is the midpoint?
A. 20,050
B. 20,100
C. 20,150
D. 20,200
Answer: B
Lesson Assignment
Complete this assignment before moving to Lesson 7.
Part 1: Define the Terms
Write one or two sentences explaining each term in your own words:
• Support
• Resistance
• Zone
• Rejection
• Acceptance
• Breakout
• False breakout
• Retest
• Follow-through
• Role reversal
Part 2: Create Support and Resistance Zones
Choose one completed NQ or MNQ chart.
Mark:
• Two support zones
• Two resistance zones
• One higher-timeframe level
• One range
For each area, record:
Timeframe:
Upper boundary:
Lower boundary:
Why the area is important:
How many times price tested it:
What happened after each test:
Part 3: Reaction Strength
Find three reactions from support or resistance.
For each reaction, record:
Level:
Timeframe:
Candle close:
Distance price moved away:
Was there follow-through?
Did price return immediately?
Was the reaction strong, weak, or unclear?
Explain your answer.
Part 4: Rejection or Acceptance
Scenario A
Resistance zone:
20,100 to 20,120
Price high:
20,135
Candle close:
20,090
The next candle moves to:
20,050
Did price show rejection or acceptance?
Answer:
Price showed rejection because it traded above the resistance zone, closed back below it, and continued lower.
Scenario B
Resistance zone:
20,100 to 20,120
Candle close:
20,145
The next two candles remain above:
20,120
Price then reaches:
20,200
Did price show rejection or acceptance?
Answer:
Price showed acceptance because it closed above resistance, remained above the zone, and continued higher.
Scenario C
Support zone:
19,980 to 20,000
Price low:
19,960
Candle close:
20,015
The next candle moves to:
20,050
Did price show rejection or acceptance?
Answer:
Price showed rejection of lower prices because it traded below support, closed back above the zone, and continued higher.
Scenario D
Support zone:
19,980 to 20,000
Candle close:
19,950
The following candles remain below:
19,980
Price then reaches:
19,900
Did price show rejection or acceptance?
Answer:
Price showed acceptance below support because it closed below the zone, remained below it, and continued lower.
Part 5: Breakout and Retest Exercise
Find one bullish breakout and one bearish breakout.
For each example, record:
Original level:
Direction of breakout:
Did the candle close beyond the level?
Was there follow-through?
Did price retest the area?
Did the retest hold?
Did the previous level change roles?
What happened next?
Part 6: False Breakout Exercise
Find two examples where price moved beyond a level and returned.
For each example, record:
Level:
Price beyond the level:
Candle close:
Did price return inside the range?
Was there movement in the opposite direction?
Was the move a false breakout?
What evidence supports your answer?
Part 7: Repeated Test Analysis
Choose one support or resistance area that price tested at least three times.
Record:
First reaction distance:
Second reaction distance:
Third reaction distance:
Did the reactions become stronger or weaker?
Was price spending more time near the level?
Did the level eventually break?
What did the repeated tests communicate?
Part 8: Range Exercise
Find one clear trading range.
Mark:
Resistance zone:
Support zone:
Range high:
Range low:
Range midpoint:
Calculate the range size.
Example calculation
Range high:
20,250
Range low:
20,050
Calculation:
20,250 − 20,050 = 200 points
Range midpoint:
20,150
Then record:
How many times did price reach resistance?
How many times did price reach support?
Did price react near the midpoint?
Did either boundary eventually break?
Did the breakout hold or fail?
Part 9: Level Quality Checklist
Review five levels and answer:
Is the level clearly visible?
Is it connected to a meaningful swing?
Did price create a strong reaction?
Is it relevant to the current price?
Is it important on the selected timeframe?
Has the level been tested repeatedly?
Are the reactions becoming weaker or stronger?
Is another major level nearby?
Would this level affect an entry, stop, or target?
Remove any level that does not provide useful information.
Part 10: Five-Day Level Journal
Observe five completed trading days.
For each day, record:
• Previous day high
• Previous day low
• Asia high
• Asia low
• London high
• London low
• Premarket high
• Premarket low
• Major one-hour support
• Major one-hour resistance
• Strongest reaction of the day
• Most important breakout
• One false breakout
• Whether a previous level changed roles
At the end of five days, write down which levels produced the clearest reactions.
Do not assume that five days are enough to prove a complete strategy.
The purpose is to improve your ability to identify and evaluate meaningful areas.
Key Takeaways
• Support is an area where downward movement may slow, stop, or react.
• Resistance is an area where upward movement may slow, stop, or react.
• Support and resistance should usually be treated as zones instead of exact lines.
• Previous swing highs and lows may become important support or resistance.
• Repeated reactions can make a level more visible.
• Repeated tests can also weaken a level.
• Reaction strength should be measured by the close, movement away, and follow-through.
• A reaction does not automatically confirm a complete reversal.
• Rejection means price could not maintain movement beyond an area.
• Acceptance means price moved beyond an area and remained there.
• A breakout should be evaluated by its close, strength, and follow-through.
• A false breakout moves beyond a level but fails to remain there.
• A retest occurs when price returns to a broken area.
• Broken resistance may become support.
• Broken support may become resistance.
• Price does not always provide a perfect retest.
• Higher-timeframe levels generally carry more information than minor lower-timeframe levels.
• Lower-timeframe levels can help provide detail, but they should not overrule the larger context without evidence.
• Too many chart levels create confusion.
• The approach into a level can provide information about buying or selling pressure.
• Support and resistance inside a range behave differently from levels inside a strong trend.
• Support and resistance are locations to observe, not automatic entry signals.
• Stops should be connected to invalidation, not placed randomly outside a line.
• The distance to the next support or resistance area affects risk-to-reward.
• A valid trading decision still requires context, confirmation, risk, and a target.
Final Lesson Reminder
Support and resistance tell you where to pay attention.
They do not tell you what must happen next.
Do not buy only because price reached support.
Do not sell only because price reached resistance.
Instead, ask:
Is this level clearly visible?
Which timeframe created it?
Is price trending or ranging?
How did price approach the area?
Did price reject the level or accept beyond it?
Where did the candle close?
Was there follow-through?
Did the level change roles?
Is there enough room to the next target?
Where would my idea become invalid?
A strong trader does not react to every line on the chart.
A strong trader waits to see how price behaves when it reaches a meaningful location.
In Lesson 7, you will learn what liquidity means, where buy-side and sell-side liquidity may form, why previous highs and lows attract price, and why a liquidity sweep is not automatically an entry signal.
Educational Disclaimer
Tick Lab is provided for educational and informational purposes only. Nothing in this lesson should be interpreted as financial advice, investment advice, or a guarantee of trading results. Futures trading involves substantial risk and may not be suitable for everyone. Support and resistance areas do not guarantee future market reactions. Always use proper risk management and consider practicing in a simulated environment before risking real capital.