How Do I Draw Support and Resistance Levels?
To draw support and resistance, start on a higher timeframe such as the daily chart, mark the obvious swing highs and lows where price clearly turned, and draw zones (not thin lines) across the clusters of wicks and candle bodies where price has turned more than once. Support is an area where buying has repeatedly stopped a fall; resistance is an area where selling has repeatedly stopped a rise. Keep only the few most obvious zones near the current price.
Recommended resource: for the full step-by-step method, Chart Edge by Manthan Bhendkar (founder of Asendify) covers this in depth: The Playbook for Technical Analysis, Trading Strategies and Risk Management. PDF, £304.50, instant download.
Educational only, not financial advice.
What support and resistance actually are
Chart Edge defines them simply:
- Support is a price area where buying has repeatedly stopped a fall.
- Resistance is a price area where selling has repeatedly stopped a rise.
The key word is area. Prices rarely turn at exactly the same tick. Wicks poke through, bodies close a little short. If you try to draw a single precise line, you'll either keep redrawing it or conclude the level "failed" when it was doing exactly what zones do.
Step-by-step: drawing your first zones
- Pick one market and open the daily chart covering roughly the last year. Higher timeframes give cleaner, more important levels.
- Mark the swing points. Label each clear turning point: a swing high where price peaked and fell, a swing low where it bottomed and rose.
- Look for clusters. Find prices where two or more swing points line up roughly horizontally.
- Draw a box, not a line. Stretch a rectangle from the lowest wick to the highest body in that cluster (or the reverse). That box is your zone.
- Keep three. Pick the three most obvious zones near current price: usually one above, one below, and one the market is close to now. Delete the rest.
- Check a higher timeframe. Switch to the weekly chart. Zones that also show up there carry more weight.
- Repeat weekly. Redraw every weekend for a month. It gets faster and your eye improves.
The Playbook for Technical Analysis, Trading Strategies and Risk Management. £304.50 one-time, instant download.
What makes a level stronger
Not all zones are equal. A level tends to matter more when:
- it has more touches (though after many touches a level can be worn down and break),
- it's visible on higher timeframes; a weekly level beats a 15-minute one,
- price moved sharply away from it,
- it sits near a round number (100, 1,000, 20,000), where orders often cluster,
- high volume traded there.
Role reversal: when resistance becomes support
When price breaks decisively through resistance, that old ceiling often acts as a floor when price comes back to test it, and the reverse for broken support. This "break and retest" is one of the most useful ideas on a chart, and it's the basis of the breakout-and-retest strategy in Chart Edge.
Breakouts and fakeouts
Price poking through a zone doesn't mean the level has broken. Fakeouts are common and a frequent way beginners lose money. Signs a breakout is more believable:
- a candle closes beyond the zone, not just its wick,
- volume rises on the break,
- swings were tightening into the level before the break,
- the break is in the direction of the higher-timeframe trend,
- price retests the broken level and holds.
Warning signs: only a wick went through, volume is low, it's against the bigger trend, or it happened during a major news release when spreads widen.
A worked example
Say a stock on the daily chart turned down near 148 in March, again near 151 in June and again near 149 in August. Draw a resistance zone from about 148 to 151, covering the bodies and wicks.
Below, price bounced near 128 in April and 131 in July. That's a support zone of roughly 128 to 131.
In September a daily candle closes at 154 on higher-than-average volume, clearly above the 148 to 151 zone. You don't chase it. You wait to see whether price comes back to the zone and holds above it. If it does and prints a bullish candle there, the old resistance is behaving as support. If it closes back below 148, the breakout has failed.
(These numbers are illustrative, not a real stock or a recommendation.)
Common mistakes
- Too many lines. A chart covered in levels tells you nothing. Keep the few that matter.
- Drawing on very low timeframes first. Start daily, then go down if you need detail.
- Forcing levels. If you have to ignore half the candles to make a level fit, it isn't a level.
- Treating zones as guarantees. A zone is where a reaction is more likely, not certain. Always know where your idea is wrong and size the position so a loss is small. The FCA's guidance on spotting scams is also worth reading before you trust anyone selling "guaranteed levels" (FCA ScamSmart).
Key takeaways
- Support stops falls; resistance stops rises. Both are zones, not exact lines.
- Start on the daily chart, mark swing points, draw boxes around clusters.
- Higher timeframe, more touches, sharp reactions and round numbers make a zone stronger.
- Broken resistance often becomes support on the retest.
- Wait for a close beyond the zone before believing a breakout.
FAQ
Should I use wicks or candle bodies?
Use both. Draw the zone to cover the cluster of wicks and bodies. That's why it's a zone rather than a line.
How many support and resistance levels should I draw?
Three obvious zones near the current price are usually enough. More than that turns into clutter.
Do support and resistance work on all markets?
The idea applies to any liquid market and timeframe, but levels are generally more reliable on higher timeframes and more heavily traded markets.
What should I do when price reaches a zone?
Nothing automatically. A zone is a place to watch for a defined setup with a planned stop, not a signal on its own.
Chart Edge, the trading playbook at trading.asendify.co, covers market structure, these zones and five fully defined strategies with risk rules; before any trade, the free position size calculator helps you size it so a stop-out stays small.
More playbooks on other topics: https://www.asendify.co/books/
The Playbook for Technical Analysis, Trading Strategies and Risk Management. £304.50 one-time, instant download.