Support and resistance

Price remembers where it turned before. Support is an area below price where falls have stopped, resistance is an area above where rises have stopped, and both are zones, not exact lines.

Draw levels on the daily chart first, use both wicks and closes to mark the zone, count the touches, then check the detail on the hourly chart.

When price breaks through a level, the level often swaps jobs. Broken resistance can act as support on the way back down, and broken support can act as resistance on the way back up.

Some levels are visible to everyone without drawing a single line. Round numbers and the previous day's and week's highs and lows are where many traders place orders and alerts.

A bounce trade needs three prices decided in advance. Entry inside the zone, stop-loss beyond it, take-profit before the next level, sized so the stop costs no more than 1% of the account.

Support and resistance trades lose too. Three real losing setups on EURUSD show the usual ways it goes wrong, a zone that finally breaks, a false break that takes your stop, and a trade from the middle of a range, plus the trap of drawing too many lines.