Topic 3.1.2: Support, Resistance, and Trends

Support and resistance levels form the backbone of technical analysis.

• Support: A price level where buying interest is strong enough to prevent price from falling further.
• Resistance: A price level where selling pressure tends to prevent the price from rising.

When price breaks through these levels, it may signal a continuation or reversal of the trend.

Trend Types:

• Uptrend: Series of higher highs and higher lows.
• Downtrend: Series of lower highs and lower lows.
• Sideways (Range): Price moves within horizontal levels.

Trendlines are used to connect lows in an uptrend or highs in a downtrend. They help identify areas of dynamic support/resistance.

Successful traders follow the adage: “The trend is your friend—until it ends.”