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[Oluti]

Support and resistance levels or supply and demand levels are the backbones of technical trading. Regardless of the type of technical analysis methods used, be it an indicator based trading system or a price action based trading system, support and resistance levels plays a crucial role.

Although not evident immediately, the moving average crossovers or the overbought and oversold levels on the oscillators are often a product of the support and resistance levels, and in most cases, you can see the signals coinciding with the support and resistance levels.

Common knowledge dictates that traders should buy at support and sell at resistance. However, in some cases, you will find that the support or the resistance level that you were hoping to go long from or short from would be breached. In such cases, if you had a pending order, it would most likely be triggered and in some cases hit your stop loss as well.

This brings us to the question as to why support and resistance levels break and if there is a way to identify stronger levels from the weaker ones.

Why support and resistance levels become weak?
Without going too much into the details, support and resistance levels are areas or price zones where the buying or selling pressure overwhelms the other. Thus, price finds it harder to breach these levels and in most cases results in a reversal in the direction of prices.

But this is not always the case as time evolves, these concentrated areas of buying and selling pressure start to become diluted.

Once the levels are weak enough, the price is able to break out from these levels with relative ease.

There are many different ways price breaches or breaks a support or resistance levels. The most common ways are:

1. Price breaks the support/resistance level with a strong bullish or bearish candlestick
2. Price hovers around the support/resistance level, makes a fake breakout and then breaks the support/resistance level

The first example below shows two of the instances mentioned.


Example 1: Support and resistance levels break

There are a number of reasons why support and resistance level can be breached, but here are the most commonly occurring reasons.

Undiscounted news event
The markets typically tend to discount all the news there is to know. Thus, when some new information is revealed, the markets adjust accordingly. This leads to a strong bullish or bearish candlestick that break the most obvious or the nearest support and resistance levels.

In most of these cases, prices don't make a pullback when a support or a resistance level is breached strongly, and trends are often the strongest here at least for a few more sessions.

Price consolidation
When price consolidates around a support or resistance levels, investors start to accumulate prices. The longer price consolidates near a support or a resistance level, the weaker these levels become. Very often, all it takes is a mere market report or an economic release to break past the supply and demand zones.

Fresh versus stale support and resistance levels
Traders should know that a support level can act as resistance and vice versa when it is breached. Support or resistance level is known to be strongest on the first test, and there are higher chances that these levels will hold.

However, caution should be applied as this is not always the case. The next example shows how a freshly formed support level is eventually breached, despite the level staying relatively fresh (being tested just once as support).

Example 2: Freshly created support level is breached

As the above examples suggest, support and resistance levels continue to change as price continues to unfold and new information is digested by the markets. Once a support or resistance level is identified, it is always best to validate these levels with another indicator or with some fundamental analysis in order to ascertain whether the levels will hold or break.

As always, using a level of invalidation for the analysis as the stop loss level can be a simple yet objective way to not only protect the losses but also as a way to invalidate the analysis.

 

[lioralace]

Let’s be real: support and resistance (or, if you’re fancy—supply and demand) is about as “basic” as technical analysis gets, but also… the entire market kinda revolves around it. Honestly, doesn’t matter if you’re glued to your RSI indicator, squinting at moving averages, or just trying to catch vibes from Japanese candlestick charts—everything boils down to those invisible walls where price either bounces off like a stubborn cat or smashes right through.

You hear this all the time, right? “Buy at support, sell at resistance.” Easy in theory! Then reality kicks in, and suddenly price slices through your precious level like a hot knife through butter—stop losses exploding everywhere, traders crying into their coffee, the whole nine yards. So why do these wonder-zones even fail? And—million dollar question—how can you figure out which ones will actually hold up versus those that fold faster than a cheap lawn chair?

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### Why Do Support & Resistance Levels Get Weak?

Think of these zones as areas where buyers (or sellers) once ganged up and overpowered the other side. Big energy. But here’s the thing—these zones are not carved in stone. Market vibes change; that big wall of buyers fizzles out, or maybe some whales cash out and dilute the firepower. Boom—what was a rock-solid barrier last week suddenly loses its grip, making it a prime candidate for a dramatic break.

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### The Usual Ways Price Blasts Through

1. The Sledgehammer Breakout: Sometimes price just bulldozes right through with a monster candle. It’s like, “Nope, we’re done here,” and the market races away. Looks great in hindsight, but in the moment? Pretty chaotic.

2. Fake-outs & Whipsawing: Then there’s the market’s favorite prank: the fake break. Price sticks a toe over the line, sucks in eager traders (and their stops), then either snapbacks into the old range or actually breaks out after trapping everyone. Like market psychology is just a bored cat knocking things off shelves for fun.

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### Why Do Levels Break?

* Breaking News Mayhem: Markets are pretty good at baking in what’s known, but drop an unexpected bombshell—Fed surprise, sketchy earnings, oil spill, whatever—and price can go vertical/horizontal like a rollercoaster. Forget those tidy levels.

* Death by Boredom (Consolidation): You ever watch paint dry? That’s a market stuck consolidating at a key level, draining its willpower the longer it just… sits. All it needs is a light breeze (minor news, random tweet), and boom—zone busted.

* Old vs. New: Fresh levels—like, first-time-tested zones—tend to be meatier. But don’t get too cozy; they’re not invincible, and the more often price circles back, the weaker the level gets. Overused zones are like leftovers: the more you reheat, the less flavor they’ve got.

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### How to Spot the Beefier Levels

Here’s the real tea: don’t blindly trust any random line you drew after one glance at a chart. If a support aligns with, say, the daily 200-MA, a prior demand spike, or some actual news, it’s stronger. If it’s out there alone with no backup? Watch your back. Mash up technicals and a bit of fundamentals for better odds.

You want confluence. The more tools and clues pointing to a zone—historic bounce, significant moving average, fib levels, you name it—the sturdier it probably is. If you’re staking your money on a “level” nobody but you sees, you’re probably just trading your imagination.

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### Don’t Be a Bagholder: Protect Your Trade

Set a stop loss. For real. Not just mentally—actually use one based on the zones you’re trading. If price obliterates your area, take the L and bail. No shame in sticking to the plan. That’s how you survive to fight another day instead of rage-quitting trading altogether.

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### In the End…

Support and resistance? Absolutely crucial—but don’t treat ‘em like gospel. They fade, they break, sometimes spectacularly, and understanding the “why” behind those moves is what keeps you from getting wrecked over and over.

Bottom line: markets shift, levels weaken, news blows stuff up, and traders everywhere get humbled constantly. Stay on your toes, trust your risk management, and remember: surviving trumps ego-chasing every time. Trading’s already hard enough… don’t make it harder by expecting magic from a couple of lines on your screen.