#Support and resistance levels are points that limit the future movement of prices. Lower levels represent support and higher levels represent resistance. Prices can either break through these levels or react to them (pullback). Once broken, the resistance level becomes support (as long as the price stays above it). The longer a level resists, the stronger it is as support. A similar situation occurs when support turns into resistance. With the help of these levels, we can identify a significant price range and find an entry or exit point.
Like price movements, levels can be global or local, depending on the selected time frame.

When the price moves down, it is testing support. When the price reaches a level, it may bounce off and then move up. If the price breaks the current support, it may continue to fall. In this situation, you can trade based on a breakout or a false breakout. At the end of this article, we will look at an example of a breakout.

Resistance acts in a similar way, but in the opposite direction. When the price stops rising at the “n” level, it may indicate that the resistance has been reached.

Let's look at the example in the screenshot above. The price has been oscillating between support and resistance for a long period. Both levels have been tested several times. Sometimes, the price dropped below the support, but the breakout turned out to be false. After four full touches and two false breakouts, the level was broken. A consolidation took place. The price tested the old support as a new resistance, bounced off and created new lows.

Most trading terminals and charting tools (such as TradingView) have built-in drawing tools. These allow you to draw levels in detail, according to different principles. These tools range from simple straight lines to geometric shapes and more complex tools such as Fibonacci levels.

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