Support and resistance, drawn honestly

Anyone can draw a line that fits the past. The test is whether price has repeatedly turned at it — and how you would know if it had not.

Last updated 2 August 2026

What a level actually is

Support is a price where buyers have repeatedly appeared; resistance is a price where sellers have. Both are summaries of behaviour, so a level's only claim to significance is the number of times price has turned at it and how cleanly. Two touches is a coincidence. Five or six touches across three years is a pattern.

Why sloped lines beat horizontal ones

Horizontal levels only describe a stock that is going nowhere. Most charts drift, and their turning points drift with them — so the line that has actually held is sloped. Fitting a rising floor and a rising ceiling separately, rather than forcing a parallel channel, also lets you see a channel that is widening or narrowing, which is itself information about whether participants are getting more or less agreed about value.

How to avoid drawing what you want to see

  • Define the points mechanically. A swing high is a bar whose high beats the ten bars either side of it. No eyeballing.
  • Use a robust slope. The median of the pairwise slopes ignores one freak spike; a line of best fit does not.
  • Score the fit and be willing to discard it. If price has not respected the line, the honest answer is that this chart has no tradable level right now.
  • Fit in log space. A 10% move should look the same on a $9 stock and a $900 one.

Trading the level without being run over by it

Levels get broken; that is what makes them informative. Two rules follow. First, an entry at support needs confirmation that price has turned, not just arrived. Second, a break through resistance is a reason to take profit, not a reason to chase — the measured behaviour ends where the channel does.

See it live: stocks at their floor, stocks through their ceiling, or any ticker from the stock finder with its lines drawn and scored.

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