Support and Resistance

Price pokes above resistance, the candle looks decisive, and half the traders watching jump in on the break, only for price to reverse hard and leave them holding a loss inside the old range. The other half wait, watch the retest hold, and get a cleaner entry a few candles later. The difference between the two groups usually comes down to patience, not analysis. What a breakout is supposed to do A genuine breakout clears a level, support or resistance, and keeps going with enough conviction that the level stops mattering as a ceiling or floor. The clearest tell isn’t the initial break candle, it’s what happens in the few candles after, does price hold above the old resistance, or does it drift straight back below it as if the break never happened. ...

Support and resistance are simply the levels where price has reacted before, on the working assumption that where the market cared once, it’s likely to care again. It isn’t a law, but it’s a strong enough tendency to build a plan around. What a level is Resistance sits above current price, where sellers previously showed up in enough size to turn the market back down, while support sits below, where buyers did the same thing on the way back up. Neither is really a single price so much as a zone, bounded roughly by the wicks that tested it and the closes that respected it. Ask the market to bounce off an exact line to the pip and you’re asking for more precision than it usually offers. ...

One signal on a chart is an opinion. Three or four independent signals lining up at the same price are closer to a fact, and confluence is the habit of noticing when that happens instead of acting on the first thing that looks promising. What confluence means Confluence is simply multiple, independent signals pointing at the same price or the same trade idea at once, a support level, a trendline, and a Fibonacci retracement all landing within a few points of each other, for instance. None of those three signals is especially strong alone, plenty of trendlines break and plenty of Fibonacci levels get ignored, but three separate reasons for the market to react in the same small area carry more weight together than any of them do apart. ...