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How to draw support and resistance levels the right way?

1️⃣ Why Are Support and Resistance Levels So Important?
Support and resistance levels show where price has reacted strongly in the past. These are zones where many traders including large players have placed buy or sell orders.

Support = where buyers step in and push price up
Resistance = where sellers step in and push price down

These levels are important because they act like decision zones:
- Price might bounce from these levels
- Or break through and start a new move
- Or even fake out traders before reversing again

Knowing where these levels are gives you an edge:
- You can better time your entries and exits
- You avoid chasing price in the middle of nowhere
- You prepare for market reactions not random guesses

Think of them like traffic lights for the market when price hits them, something important usually happens.

2️⃣ Three Main Types of Support and Resistance

There are 3 key types of support and resistance levels traders commonly use:

- Level-Based: Horizontal zones drawn from key highs and lows
- Pattern-Based: Support/resistance found in chart patterns like triangles, flags, etc.
- Channel-Based: Diagonal trendlines showing support and resistance in a channel

Today, we focus on level-based support and resistance horizontal lines drawn on key price zones.

3️⃣ How to Draw Support and Resistance Levels

Use daily, weekly, or monthly timeframes to find major zones. These higher timeframes give you stronger, more respected levels.

Look for:
- Candle bodies that close and open around the same price
- Strong wicks rejecting a certain level
- Zones where price has bounced multiple times in the past

I often pick:
- The close of a red candle
- The open of the next green candle

These spots usually show where sellers lost control and buyers stepped in — or vice versa.

4️⃣ Timeframes and Their Strength

The higher the timeframe, the stronger the level:
- Monthly = very strong, long-term zones
- Weekly = strong and reliable
- Daily = useful for swing trading
- Lower timeframes (15m, 5m) = more noise, less reliable unless you're day trading or scalping

Pick levels based on your strategy:
- Swing traders = use daily/weekly/monthly
- Scalpers = lower timeframes with extra confluence (volume, structure)

5️⃣ Don’t Use Support/Resistance Alone

Support and resistance are helpful — but not enough by themselves. Always combine them with:
- Market structure (higher highs/lows)
- Volume confirmation
- Indicators or price action signals

You want to watch how price reacts at your levels. Wait for confirmation before making decisions.

6️⃣ Common Mistakes Traders Make

Mistake 1: Drawing too many levels clutters your chart and creates confusion.
Mistake 2: Keeping old levels that have already been broken or invalidated.
Mistake 3: Ignoring volume. Just because price hits a level doesn’t mean it will reverse. You need volume to back the move.

Also:
Don’t enter blindly on breakout, breakouts can fail. Wait for confirmation.
Don’t assume a level is strong just because it’s touched once — look for multiple rejections.

7️⃣ Example: How I Draw Support/Resistance

Let’s say I’m looking at a daily chart.
- I find a red candle that closes at 42,000
- Then a green candle opens at 42,000 and pushes higher

That tells me buyers stepped in at 42,000 — this is a potential support.

I draw my horizontal line across that level.
Then I zoom into 30m or 15m charts to watch price behavior when it comes back to that level.

If price respects it again, I may enter a trade based on the reaction.

This technique gives me more confidence and clarity.

I know where liquidity might be waiting.
I can combine it with indicators or volume tools.
I avoid random trades.

🔄 Summary

Identify a timeframe – Use the monthly, weekly, or daily chart.
Look for two candles – Draw your support or resistance line at the point where one candle closes and the next one opens.
Make sure the level hasn’t been hit yet – This helps you spot areas where liquidity grabs might happen.
Wait for price to reach the level – Once price touches the support or resistance zone, watch how it reacts.
After price touches the level, remove it – Once tested, that level is no longer fresh and should be cleared from your chart.

Support and resistance isn’t magic — but used with confluence, it becomes a powerful guide.

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Disclaimer: This is not financial advice. Always do your own research. This content may include enhancements made using AI.

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