Lesson

Support & Resistance Levels | Options Educator

Find key price levels, trade breakouts, and understand the polarity principle.

In this lesson

Understanding Support and Resistance

  • Support = price level where buyers tend to enter
  • Resistance = price level where sellers tend to enter
  • These levels form from market psychology and memory
  • Broken support becomes resistance (and vice versa)

Identifying Key Levels

  • Look for prices tested 2-3+ times
  • Trendlines connect swing highs or lows
  • Moving averages act as dynamic support/resistance
  • Fibonacci levels identify potential reversal zones

Trading Support and Resistance

  • Buy near support with stops below
  • Sell near resistance with stops above
  • Trade breakouts with confirmation and volume
  • Pullbacks to broken levels offer lower-risk entries

Advanced Level Concepts

  • Think of S/R as zones, not exact lines
  • Confluence (multiple factors) = stronger levels
  • Market structure (HH/HL or LH/LL) defines trend
  • Multiple timeframes agreeing increases probability

Explore