30-Day Stock Market Series
Day 6 of 30
Support & Resistance: The Foundation of Every Trade Setup
Support and resistance are the most fundamental concepts in technical analysis. Every professional trader — from day traders to fund managers — uses these levels.
What is Support?
A price level where buying interest is strong enough to halt a price decline. Historically, each time price nears this level, buyers step in. Think of support as a floor.
What is Resistance?
A price level where selling pressure is strong enough to halt a price rise. Each time price nears this level, sellers dominate. Think of resistance as a ceiling.
Role ReversalWhen a resistance level is broken convincingly, it often becomes support. When support breaks, it often becomes resistance. This is one of the most useful rules in trading.
How to Identify Key Levels
- Previous highs and lows — the most reliable S/R levels
- Round numbers — ₹100, ₹500, ₹1000. Psychological magnets for price
- 52-week high/low — breakouts above 52-week high are significant
- Moving averages — 200 DMA acts as dynamic support in bull markets
- Fibonacci levels — 38.2%, 50%, 61.8% retracements of a prior move
# Find pivot S/R using pandas
import pandas as pd
def find_pivots(df, window=5):
df['pivot_high'] = df['High'][(df['High'] == df['High'].rolling(window, center=True).max())]
df['pivot_low'] = df['Low'][(df['Low'] == df['Low'].rolling(window, center=True).min())]
return df
Zone vs Line
Support and resistance are zones, not exact lines. A stock won't respect ₹1,580.00 perfectly every time — think of it as ₹1,570–1,590 zone. Trading zones instead of exact lines reduces frustration and improves accuracy.
Strong Support Signs
Multiple touches without breaking. High volume on bounces. Clear lower wicks on candles.Weak Support Signs
Long time since last touch. Low volume bounces. Candles slicing through repeatedly.Today's Exercise
Pick a stock you're watching. On its daily chart, draw 3 support zones and 3 resistance zones using prior highs/lows. Observe how price behaves near these zones over the next week.