Price Action: How To Draw Support and Resistance

In market movements, prices move according to demand and supply. There are certain points where prices seem to bounce off. These are called the support and resistance points.

In this lesson we are going to learn how to draw simple support and resistance lines.

There are two ways to draw your support and resistance:

1. Drawing the line exactly at the high/low of the bar.

2. Drawing in-between the shadows of the bar.

The first is usually the basic where it will show simple points of support and resistance. As markets are not always exact as banks will try to flush you out of your stop-loss, there will be instances where the shadow of the bar will extend out of their support or resistance. Hence we will look at the middle points where the line is in-between those shadows of the bars.

Drawing support and resistance can take quite abit of skill and practice. But it is the basis of price action trading where you'll see areas of price reversals. The higher the timeframe, the stronger the resistance/support will be. Try drawing those support/resistance lines in your chart in different timeframes. You'll find some lines are far more significant than others. Hence you do not need to draw so many lines at all!

Till then, good trading to all!