Forex glossary
Support and Resistance
Support and resistance are levels or zones where declines or advances previously paused and which are considered possible reaction areas. After a break, a role-reversal hypothesis can be examined. Zone selection depends on data and timeframe; past reactions do not guarantee that price will stop there again.
Illustrative example
How does it work in practice?
Assume EUR/USD previously bounced twice within 1.0950–1.0960. A trader marks it as support; a close below 1.0950 may invalidate that hypothesis under the stated rule rather than implying an inevitable rebound.
A case to work through
Price remains within the zone
Hypothetical support spans 100–102; the plan invalidates it after a close below 100.
- Close=100.5 is below the midpoint of 101 but remains inside the zone.
- The invalidation rule is unmet.
What follows? Assess the lower boundary under the plan rather than an arbitrary internal line.
Example boundary: A zone is a reaction hypothesis rather than a physical price barrier.
A useful distinction
Support and Resistance / Pivot Points
Support and resistance can come from price reactions; pivot points calculate levels with specified formulas.
Check your understanding
Check a close against the support zone's lower boundary.
Show the answer and explanation
The support invalidation condition
The close is below the lower boundary.
From observations to price structure
Step 5 / 10 · 0 / 10 reviewed
View the full sequence →Progress is saved only in this browser.
Read the fuller explanation
Related terms
Sources and documentation
- StockCharts – support and resistance
Reaction zones, break criteria and possible role reversal of levels.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.