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Support and resistance

Why P&F makes these levels so easy to see.

Support is a price level where buyers have stepped in. Resistance is a level where sellers have stepped in. On a P&F chart, these levels are easier to see than on almost any other kind of chart.

Why P&F makes them obvious

Because every box sits on a fixed price grid, tops that stop at the same price line up in exactly the same row. There's no guessing whether two highs are "close enough." Either the X's reached the same box or they didn't.

• Resistance: a row where two or more X columns topped out.
• Support: a row where two or more O columns bottomed out.

The more tests, the more it matters

A level tested once is a reference point. Tested twice, it's established. Tested three or more times, it's a level the whole market is watching, which is why breaking it produces the stronger Triple and Quadruple signals.

Old resistance becomes new support

Once price breaks above resistance, that level often acts as support on the next pullback. Traders who missed the breakout buy the dip back to it, and sellers who were waiting there have already sold. The same works in reverse: broken support often becomes resistance. This is the idea behind the Catapult.

Using support and resistance

• Expect price to react at well-tested levels. Don't be surprised by a pause.
• The distance from current price to the nearest resistance shows how much room a move has before it meets sellers.
• The nearest support below an entry is a natural reference for a stop.

For education only. Nothing here is investment advice or a recommendation to buy or sell any security.