Support and resistance
Price zones where buying (support) or selling (resistance) has repeatedly stepped in.
Technical indicators
What is Support and resistance?
Support is a price zone where a falling stock has repeatedly found buyers; resistance is a zone where a rising stock has repeatedly met sellers. They exist because traders remember prices: buyers who missed a level buy when it returns, and holders who were trapped at a high sell when price gets back to break-even.
Formula
Flash Finance method: every confirmed swing high and swing low of the last year is a candidate price.
Candidates within max(1.2% of price, 0.6 × ATR) of each other merge into one level.
A level's strength = the number of swings it absorbed ('touches').
How to read it
- The more touches a level has, the more traders are watching it.
- Once broken, support often becomes resistance (and the reverse), a change of polarity.
- Distance to the nearest support defines a natural stop-loss; distance to resistance defines the room to run.
Common mistakes
- Drawing exact lines. Levels are zones about one ATR wide, and stop-losses placed exactly on a level get taken out.
Use it on Flash Finance
Support and resistance for any stock (Technical Setup) →Chart patterns: breakouts from ranges and triangles →
