Warning on risks: Financial contracts for difference are complex instruments and are associated with a high risk of rapid financial losses due to leverage. On 72.76% of retail investor accounts, financial losses occur when trading financial contracts for difference with this provider. You should consider whether you understand how financial contracts for difference work, and whether you can afford to take the high risk of suffering financial losses. Please read the Risk Disclosures.

Strategies

Pin Bar

Turnaround strategy

Moving Averages

RSI Oscilator

Stochastics Oscillator

MACD

Price Flow

SR Zones

Support and Resistance Zones

Support and resistance (S/R) zones are among the foundations of technical analysis. Although almost every trader is familiar with them, only a few are able to apply them correctly on a chart, and even fewer trade them with discipline. S/R zones are not just colored rectangles drawn on a chart. They are areas where it is decided whether the market will reverse and start forming a new trend, or break through the zone and continue in the existing trend. In this strategy, we will look at how they work, why they are so important, and how even a complete beginner can use them.

Two Types

Support is a price zone where buyers tend to enter the market. The market usually does not want to fall below this level because buying interest increases. Typically, these are previous lows, consolidation areas, or places where strong price rejections occurred in the past. On the chart, this area is located below the current market price.

Conversely, resistance is an area where sellers take control. The price often climbs to this level but is then pushed back down by selling pressure. These are usually previous highs or levels with strong selling pressure and are located above the current price.

How Do S/R Zones Work?

These zones represent price areas where the market frequently reacts. In practice, they are zones where supply meets demand. Buyers defend price declines, while sellers defend price increases. S/R zones help us understand where a trend change may occur, where suitable entry or exit points are located, and where caution is required. Increased volume, rapid price movements, and false breakouts often occur in these areas, influencing overall market sentiment.

How to Properly Identify S/R Zones

Identifying S/R zones in practice is not complicated if a trader knows what to focus on in the chart. Zones most often form in areas where the market reacted strongly in the past. Typical examples are swing highs and lows—points where price sharply reversed. This approach creates a support zone on the chart.

Strong S/R zones are also frequently found in consolidation ranges, where the market moved sideways for a period of time. In the illustrated USOIL example, this is a consolidation marked by a purple circle. As you can see, the market tested this zone three times before returning back to support. It is also crucial to pay attention to the moment when price dropped below the standard boundary of the support zone (marked by an orange circle on the attached chart). From a long-term perspective, this is not unusual—the market uses this behavior to collect additional liquidity, specifically limit Stop orders.

Conclusion

S/R zones are a fundamental building block of technical analysis and are widely applicable across all markets. They help traders better understand price behavior, identify potential reversals, and gain a clearer view of where the market may slow down or accelerate. Properly identified S/R zones can significantly increase trading success, while remaining one of the simplest and most reliable tools available in trading.