By drawing support and resistance zones on your chart, you can see exactly where the buyers and sellers are located. In this post I’ll show you exactly how to do this.
Every modern trading platform has drawings tools to edit your charts with. To draw support and resistance zones on your chart, use the horizontal line drawing tool.
These lines will cover the entire width of your graph. So even as price continues to print new candles and move to the right, your zones will remain visible.
How to spot and recognize support and resistance
To spot support and resistance zones, you need to look for points on your chart, where you can clearly see that the price is bouncing off or stalls.
You can apply this to any time frame, but I prefer to place support and resistance lines on the daily chart. These zones are usually the strongest. If you draw them on the day chart you will also see them on the lower time frames.
Drawing support and resistance zones
Grab a random daily chart and look for clear points where the price has bounced.
Start on the right and look to the left. We look for points where the price has bounced or stalled at least twice. See below.
Recent data is more important
You start on the right side of your chart because you can find the most recent data there. Then look to the left to see if your line aligns with bounces from the past.
The further you go back, the less important the data becomes. It is about the here and now and what happened recently.
Support and resistance zones also shift over time. That is why it is important to stay as close as possible to the current price action. These are the zones where buyers and sellers are now grouped.
Drop down for a clearer view
After you have drawn the support and resistance zones on the daily chart you can drop down a time frame to fine tune your zones. For example on the 4 hour chart.
Be careful not to be tempted to draw new zones on a lower time frame. The lower the time frame, the weaker the zones are and the lower the chance that the price will turn around or stall there.
Questions about placing support and resistance? Post them in the comments!