The Truth About Support, Resistance, and Supply-Demand

Many people ask me, what exactly are support and resistance levels?

If you only see it as a line, you will always be shaken out by false breakouts.

1. Redefining Support and Resistance

Support: It's not that the price can't go down, but that buyers form a "demand zone" here.

Resistance: It's not that the price can't go up, but that sellers form a "supply zone" here.

2. Why do these areas reverse?

Because history repeats itself.

When the price bounces multiple times at a certain level, it indicates market consensus on that price.

This is not magic; it is the manifestation of collective psychology.

3. The Essence of Supply-Demand Relationships

Structural areas do not require multiple tests.

A strong one-sided movement can create a "foundational area."

This is where the forces of buyers and sellers are severely imbalanced, and where smart money leaves footprints.

Novices look at price, while experts look at structure.

If your chart only has candlesticks, it's like being in a forest without a compass.

1. The Dimension of Time Frames

It is recommended to use 1H or higher time frames.

The less noise, the clearer the structure.

Low-magnitude fluctuations do not help your judgment at all.

2. The Meaning of Trend Channels

An upward channel is not just two parallel lines.

It is the boundary of market sentiment.

When the price is moving within the channel, there is only one thing you need to do: follow the trend.

Until the trend is broken.

3. Fibonacci is Not Mysticism

Fibonacci predicts the market's "breathing."

After a significant rise, there will be a pullback; after a significant drop, there will be a rebound.

When the key levels of 0.5 or 0.618 coincide with trend lines, that is where you should focus on high-probability positions.

Final Confirmation of Trade Signals

Morning Star, Three White Soldiers, Engulfing Patterns.

These names sound nice, but without "convergence," they are worthless.

1. What is Technical Convergence?

A single indicator is fragile.

The signal is valid only when the following three conditions overlap:

1. Price is above the trend line.

2. Effective retest after breaking the resistance level.

3. Support at key Fibonacci retracement points.

2. The Real Role of Candlestick Patterns

Candlesticks do not predict direction; they only confirm behavior.

They tell you that at critical positions, buyers or sellers really exerted force.

Candlesticks without a position are just random fluctuations.

3. Self-Review Before Entering the Market

Do not rush just because you see a traffic light.

You need to ask yourself:

Is this in line with the trend? Do I have support protection?