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Stock Price Action Analysis Course

Lesson 11: Price Behavior Patterns in Support and Resistance Zones

After knowing where support and resistance are, the next step is to observe how prices behave in these areas. This can help you determine whether the market is going to break through or reverse.

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I. Three Common Behavior Patterns

1. Rejection

• After the price touches support/resistance, a clear long shadow line or strong reverse candlestick (such as a long red or long black) appears immediately.

• Usually occurs after multiple tests, indicating that the area is effective.

• 👉 Suitable for finding reversal opportunities, with stop loss set behind the area.

2. False Break

• The price briefly crosses support or resistance, but quickly pulls back.

• Observe with volume: if the volume does not increase when breaking through, but the volume increases during the pullback, it is a typical false break.

• 👉 It is a high-probability entry point, "reverse operation" in the trend.

3. Breakout with Follow-through

• The price strongly breaks through the area, and the closing price stabilizes outside the support/resistance.

• If accompanied by a significant increase in volume, and there is a confirmation action of retracement without breaking after the breakout, it is an effective breakout.

• 👉 You can enter the market in the trend, with a stop loss set at the starting point of the breakout or the low point of the retracement.

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After understanding these patterns, you will be clearer whether to "wait for a reversal" or "follow the breakout".