Support And Resistance Structures

[Tobi]

What happens at a resistance level? Actually, a better question is what could happen to price when it reaches these levels?

Once you ask yourself what could happen, you open yourself up to more possibilities, are accepting that textbook plays may not always work and that these zones are really “potential” areas of support and resistance.

Understanding that they may not act according to your expectation hammers home that these levels, regardless of how many times price was rejected, are only potentially support and resistance zones and will only be confirmed if price rejects once again.

First thing though, you will first want to determine what constitutes a resistance level. Some traders will use previous swings while others will want to see a zone where price has moved away from more than once.

Going further, some people will use channels or even Fibonacci levels but these are not truly “structures” in the market.

 

[kit_hung]

Resistance is not a sure thing bro, it's like a speculative area. When the price reaches there, it can go back or break and continue up. So don't rely on the textbook alone.

Some use old swings, others look at the place where the price has returned twice. There are also those who like to use Fibonacci or channels but those are not real structures.

The main thing is to understand that resistance is a zone of possibility, not certainty. If you are flexible and ready for anything, you will be a smart trader. Don't limit yourself to very strict rules of theory.