Support and resistance are price levels where a market has historically reversed direction. Support is a floor — a level at which buying pressure has previously overwhelmed selling pressure and turned price back up. Resistance is a ceiling — a level at which sellers have previously overwhelmed buyers and turned price back down. It is the oldest concept in technical analysis, predating moving averages, RSI, and every indicator that has ever existed. Modern frameworks like ICT/SMC reframe these levels as liquidity pools and order blocks, but the underlying behavior — price reacting at remembered levels — is the same.
A level becomes more significant the more times it has been tested without breaking, and the more recently the tests occurred. Round numbers (1.1000, 1.2000) and prior swing highs/lows are the most common candidates.
Worked example
GBP/USD has rejected from 1.2750 three times over the past two months — early March, late March, and mid-April. Each rejection produced at least a 60-pip drop. A trader marks 1.2750 as resistance. On the fourth approach in May, price stalls at 1.2748 with a long upper wick and bearish divergence on the 4H RSI. The trader shorts at 1.2745 with a stop at 1.2770 (above the level, accounting for noise), targeting 1.2680 — the prior swing low that acted as support. Risk-to-reward: roughly 1:2.5.
Why it matters
Support and resistance is the substrate every other framework is built on. Order blocks, supply/demand zones, Fibonacci retracements, and pivot points all describe variations of the same phenomenon. A trader who can read raw S/R cleanly often outperforms a trader drowning in indicators.
Common pitfalls
- Treating S/R as exact prices. They are zones — give them 5-15 pips of buffer on majors, more on volatile pairs.
- Trading every touch. The third or fourth touch of a level often breaks rather than holds.
- Ignoring timeframe alignment. A H1 resistance inside a daily uptrend is much weaker than an aligned daily resistance.
- Forgetting that broken support flips to resistance, and broken resistance flips to support — the role-reversal is the most reliable property of S/R.