Support and Resistance: How to Find the Levels
Support and resistance are price zones where buying or selling has repeatedly shown up. Here is how to find them objectively and how to use them.
The idea
Support is a price zone where buyers have repeatedly stepped in and stopped a decline. Resistance is a zone where sellers have repeatedly capped a rally. The levels exist because traders remember prices: people who bought at a level and watched it fall often sell when price returns to break even, and people who missed a move often buy when price comes back.
Four objective ways to find levels
- Swing highs and lows. Mark turning points where price reversed. A level touched two or three times, with reactions each time, is meaningful.
- Recent range. The 20-day high and 20-day low are simple, rule-based levels. The ticker pages show these for each stock.
- Moving averages. The 20, 50 and 200 EMA often act as dynamic support in uptrends and resistance in downtrends.
- Round numbers and 52-week extremes. Prices like 100 or 50 and the 52-week high attract orders.
Zones, not lines
Draw a band, not a hairline. A stock can dip a little through a level and still hold the zone. A practical band width is roughly one ATR (average true range) around the level.
Broken support becomes resistance
When price closes decisively below support and later rallies back to it, the old support often becomes resistance, and vice versa. Confirmation matters: wait for a close beyond the zone, ideally with higher volume, instead of reacting to an intraday spike.
Using levels in a plan
- Entry near support with a stop just below the zone defines your risk clearly.
- Resistance above gives a natural first profit target.
- If the distance to resistance is smaller than the distance to your stop, skip the trade.
Common mistakes
- Drawing too many levels until the chart is meaningless.
- Treating a level as certain. It only shifts probabilities.
- Ignoring the trend. In a strong downtrend, support breaks more often than it holds.
Try it
Open any ticker page, for example MSFT, to see its 20-day swing high and low and EMAs together. Use the oversold list to find stocks sitting near support.
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Educational content only, not investment advice. Worked examples use illustrative numbers. See our disclaimer.