Module 5 – Support, Resistance & Trendlines

Every great entry, exit, and stop-loss comes down to one skill:
knowing where price is likely to react.
This module teaches you to map the battlefield — the levels where institutions stack orders,
liquidity builds, and retail traders get trapped.

What You’ll Learn

  • How to correctly draw and interpret support & resistance zones.
  • The difference between strong and weak levels.
  • How to use trendlines and channels to confirm structure and confluence.
  • How to combine levels with candlestick confirmation for high-accuracy trades.

1. The Purpose of Levels

Markets move from one value area to another.
Between those areas, price pauses, reacts, or reverses.
Support and resistance are simply those zones — footprints of past buying and selling aggression.

  • Support: A price area where buyers previously overpowered sellers.
  • Resistance: A price area where sellers previously overpowered buyers.

Forget perfect lines — think in zones.
Real price reacts within ranges, not razor-thin levels.

2. How to Draw Support & Resistance Properly

2.1 Step-by-Step

  1. Start on the Daily timeframe.
  2. Mark major swing highs and lows where price clearly reversed direction.
  3. Drop to 4H for refinement — adjust zones where multiple candles reacted.
  4. Label each zone as “major” or “minor.”

2.2 Characteristics of Strong Levels

  • Tested multiple times with visible rejection (long wicks, big reversals).
  • Coincides with a structural point (HH/HL/LH/LL).
  • Aligned with higher-timeframe zones (multi-timeframe confluence).

2.3 Weak Levels

  • Drawn from small intraday reactions.
  • No confluence or higher-timeframe validation.
  • Price sliced through them without hesitation in the past.

Rule of Thumb: The more times a level is tested, the weaker it becomes — until it finally breaks and flips polarity.

3. The Flip Principle (Role Reversal)

When support breaks, it often becomes resistance. When resistance breaks, it becomes support.
This “flip” is one of the most reliable continuation signals in trading.

  • After a bullish breakout, wait for the retest of old resistance → new support.
  • After a bearish breakout, wait for the retest of old support → new resistance.

Combine that retest with a confirming candlestick (Engulfing, Pin Bar) and you’ve got institutional-grade setups.

4. Trendlines & Dynamic Support/Resistance

Trendlines show directional strength — the slope of market emotion.
They act as moving levels that evolve with structure.

4.1 Drawing Clean Trendlines

  1. Connect at least two significant swing lows (uptrend) or highs (downtrend).
  2. Use wicks, not bodies, for precision.
  3. Keep it simple — one main line per trend. Clutter kills clarity.

4.2 Using Trendlines for Confluence

  • When a trendline aligns with a horizontal level → high-value zone.
  • When a reversal candle forms at that intersection → A-grade entry opportunity.

4.3 Channels

Parallel trendlines define the “railroad tracks” of a trend.
Trade within them until a clear breakout and structure change.

5. Liquidity Zones & Fakeouts

The market loves to test obvious levels.
That’s where stop-losses gather — and where smart money hunts them.

  • Liquidity Grab: Price pierces a level, sweeps stops, and reverses hard.
  • True Breakout: Price breaks, retests, and continues in the same direction.

Your job: wait for confirmation.
A wick rejection or engulfing bar on the retest tells you it was a fakeout.

6. Combining Levels with Candlestick Confirmation

This is the sniper framework:

  1. Identify key zone (support, resistance, or trendline).
  2. Wait for reaction (rejection wick, doji, or engulfing candle).
  3. Confirm with structure (BOS or retest).
  4. Enter on confirmation candle close or 50% retrace.
  5. Stop-loss: beyond the zone.
  6. Target: next key level (1:3 R:R minimum).

7. Practice Drills

Exercise 1 – Level Mapping

  1. Open a Daily chart of your favorite pair.
  2. Mark 5 key support and 5 resistance zones.
  3. Drop to 4H — refine each zone and note where candles reacted most clearly.

Exercise 2 – The Flip Test

  1. Find examples where resistance became support or vice versa.
  2. Mark the candlestick pattern that confirmed the flip.

Exercise 3 – Trendline Confluence

  1. Draw trendlines on 4H and Daily charts.
  2. Note where they intersect horizontal levels.
  3. Observe candle behavior at those intersections.

8. Pro Insight

Smart traders don’t predict — they prepare.
Mapping levels is preparation. It’s where you define your battlefield before the fight begins.

“Trading without levels is like boxing with your eyes closed — you might hit something, but it won’t be deliberate.”

Master this skill and your entire strategy — entries, exits, and psychology —
will feel calmer and more controlled.

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