The support and resistance (S&R) are specific price points on a chart expected to attract the maximum amount of either buying or selling. The support price is a price at which one can expect more buyers than sellers. Likewise, the resistance price is a price at which one can expect more sellers. traders can use S&R to identify trade entry points as well.
Resistance is something which stops the price from rising further. The resistance level is a price point on the chart where traders expect maximum supply (in terms of selling) for the stock/index. The resistance level is always above the current market price.
Support is something that prevents the price from falling further. The support level is a price point on the chart where the trader expects maximum demand (in terms of buying) coming into the stock/index/any financial instrument. Whenever the price falls to the support line, it is likely to bounce back. The support level is always below the current market price.
There is a maximum likelihood that the price could fall until the support, consolidate, absorb all the demand, and then start moving upwards. The support is one of the critical technical level market participants look for in a falling market. The support often acts as a trigger to buy.
S&R can be used to identify targets for the trade. For a long trade, look for the immediate resistance level as the target. For a short trade, look for the immediate support level as the target.
How to Draw Support and Resistance lines?
you want to identify all the Swing highs and lows you see on your chart. you to put a line at every top and low you see. It should look like this
The important thing here is to draw a simple line at all lows and highs. It shouldn't be very subjective.Linking the Swing highs and lows you identified with horizontal lines. Those will become your main support and resistance zones.
There is almost no way that the lines you draw will lie exactly on the highs and lows you identified. That is totally normal, be okay with it. Whenever you feel you can connect 2 highs/lows, add an horizontal line.
Once you have completed this process, you can be confident that the lines represent clear support and resistance zones.