← Reading the Chart · lesson 4 of 10
By the end of this one you'll know how to spot the price levels where buyers and sellers kept showing up before, and why those lines are fences, not walls.
Support and resistance are two of the most useful lines you'll ever learn to see, and they're nothing but fences. Support is a price where falling has stopped before, more than once, like the low fence where the horses always end up bunched when they drift downhill. Resistance is a price where climbing has stalled before, the top fence they never quite clear. Nobody built those fences on purpose. They form because lots of people remember those prices and make decisions there: some folks decided that low price was a bargain last time, and some decided that high price was where they'd had enough. Here's the part that keeps you honest: fences are not walls, and animals bust through fences all the time. And on past charts, when a price busted through its top fence, that old line has often traded like a new bottom fence afterward, though no fence ever owed anybody a thing.
Same lesson, told by a hundred dollar bill. Tap to walk it one step at a time.
In this example, a coin trades at $100, it has bounced up off $90 three times this month, and it has stalled at $110 three times.
Chart readers would call $90 support and $110 resistance.
If the price slides down to $90 and bounces again, $100 worth dips to $90 worth on the way and climbs back.
And if it breaks the fence instead and falls to $85, that $100 is now worth $85, because no line on a chart ever owed anybody a bounce.
At a Sunday barbecue your brother-in-law corners you by the grill, plate in hand. The coin he follows always bounces at 90, he says, it's basically a law, and he knows you've got $100 sitting in an app doing nothing.
Pick your move. Then peek at the other roads if you're curious.
Support and resistance are just prices where buyers and sellers have shown up before, fences that have held sometimes, never walls that promise.