Support and resistance levels are among the oldest concepts in trading — and for good reason. They represent real psychological zones where buyers and sellers repeatedly interact.
What Makes a Level “Strong”
Not all levels are equal. Strong support or resistance typically has:
- Multiple touches
- High volume at the level
- Clear rejection wicks
These signals suggest that market participants are actively defending that price zone.
Why Levels Break
A common mistake is assuming support and resistance are permanent. They’re not.
Levels break when:
- New information enters the market
- Institutional flow overwhelms retail positioning
- Momentum accelerates beyond historical norms
How TradeCompass Interprets These Zones
TradeCompass doesn’t draw static lines. Instead, it evaluates how price behaves around key zones, incorporating:
- Momentum indicators
- Volume trends
- Recent volatility
This allows for a more dynamic interpretation of market structure.
The Real Takeaway
Support and resistance aren’t about predicting the future — they’re about understanding where decisions are likely to happen.