← Trendline Course · Module 8 of 15
The floors and ceilings of price — and why broken levels reverse roles.
Trendlines are simply diagonal versions of horizontal support and resistance levels. Understanding these concepts deeply will make you a much better trendline trader.
Support is a price level where buying pressure has historically been strong enough to stop price from falling further. Think of it as a floor. When price drops to support, buyers step in — because traders remember where price previously bounced and set buy orders in anticipation of another bounce. Those clustered buy orders become the support.
Resistance is a price level where selling pressure has historically been strong enough to stop price from rising further. Think of it as a ceiling. Traders who bought lower set price targets at resistance levels and place sell orders there. Enough sell orders create a wall that price struggles to break through.
One of the most powerful concepts in trading: when a support level is broken, it often becomes resistance. When a resistance level is broken, it often becomes support.
Here's why: Imagine a level at $7 that acted as resistance. Many traders who owned stock sold there. Then price breaks above $7 and holds. Now the same traders who sold are watching $7 — if it dips back to $7, they'll buy back in because they know it's a proven level. That demand turns the former resistance into new support.
This role reversal happens constantly and is something you'll see repeatedly when analyzing trendline breaks.
Markets show a strong tendency to react at:
When a trendline also happens to intersect at one of these psychological levels, the confluence of both factors creates a particularly strong area to watch.
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