Support & Resistance

Support is a zone under current price where declines have previously stopped. Resistance is a zone above where rallies have stalled. The mechanics are memory and unfinished business: traders who missed the last bounce bid the same area, trapped buyers from a failed breakout sell the retest, and resting orders cluster where something happened before.

Zones, not lines

Markets turn in areas rather than at prices to the cent. A systematic definition usually clusters nearby swing points, for example treating all swing lows within half an ATR of each other as one zone, weighted by touch count and recency. More touches and higher volume at a zone mean more participants are watching it.

Role reversal

The classic behavior: broken resistance tends to act as support on the retest, and vice versa. This flip is the basis of pullback entries after a break of structure. Buy the return to the level that just broke, stop below the zone.

The honest caveat

Levels are partly self-fulfilling and partly hindsight. Drawn by eye after the fact, every chart "respects" its levels. The only fair test is mechanical: define the zone rule precisely, apply it identically across years of data, and let the backtest say whether the zones predicted anything.

On AlphaProve

Two library indicators supply the mechanical zone definition the section above asks for: pivot_points computes classic support and resistance levels, and williams_fractals marks the swing extremes you would cluster into zones, both read off ctx.indicators in a Python strategy. Once the rule is fixed, the tearsheet's MAE/MFE scatter is the honest test, plotting how far each trade ran against entry before turning so you can see whether price truly reacted at your levels or just drifted through them.