Often times you will see a support or resistance level that appears broken, but soon after find out that the market was just testing it. With candlestick charts, these “ ...PartnerCenterFindaBroker“Supportandresistance”isoneofthemostwidelyusedconceptsintrading.Strangelyenough,everyoneseemstohavetheirownideaofhowyoushouldmeasuresupportandresistance.Let’stakealookatthebasicsfirst.Lookatthediagramabove.Asyoucansee,thiszigzagpatternismakingitswayup(a“bullmarket”).Whenthepricemovesupandthenpullsback,thehighestpointreachedbeforeitpulledbackisnowresistance.Resistancelevelsindicatewheretherewillbeasurplusofsellers.Whenthepricecontinuesupagain,thelowestpointreachedbeforeitstartedbackisnowsupport.Supportlevelsindicatewheretherewillbeasurplusofbuyers.Inthisway,resistanceandsupportarecontinuallyformedasthepricemovesupanddownovertime.Thereverseistrueduringadowntrend.Inthemostbasicway,thisishowsupportandresistancearenormallytraded:Tradethe“Bounce”Buywhenthepricefallstowardssupport.Sellwhenthepricerisestowardsresistance.Tradethe“Break”Buywhenthepricebreaksupthroughresistance.Sellwhenthepricebreaksdownthroughsupport.A“bounce”and“break”?Saywhat?Ifyou’realittlebitconfused,noneedtoworryaswewillcovertheseconceptsinmoredetaillater.PlottingSupportandResistanceLevelsOnethingtorememberisthatsupportandresistancelevelsarenotexactnumbers.Oftentimesyouwillseeasupportorresistancelevelthatappearsbroken,butsoonafterfindoutthatthemarketwasjusttestingit.Withcandlestickcharts,these“tests”ofsupportandresistanceareusuallyrepresentedbythecandlestickshadows.Noticehowtheshadowsofthecandlestestedthe1.4700supportlevel.Atthosetimesitseemedlikethepricewas“breaking”support.Inhindsight,wecanseethatthepricewasmerelytestingthatlevel.Sohowdowetrulyknowifsupportandresistancewerebroken?Thereisnodefiniteanswertothisquestion.Somearguethatasupportorresistancelevelisbrokenifthepricecanactuallyclosepastthatlevel.However,youwillfindthatthisisnotalwaysthecase.Let’stakeoursameexamplefromaboveandseewhathappenedwhenthepricea