New investors, pay attention! How to interpret support and resistance?

Recently, I've seen many new investors entering the market, not even knowing the basics of support and resistance, only chasing highs and cutting losses. Today, I will educate everyone on this topic. But before that, let's get the mindset right: there is no guaranteed way to make money in the market, technical analysis is just a supportive tool. What truly determines your success or failure is risk management and trading discipline. Don't think you can get rich by just drawing a few lines; the market is not that simple. Understood?

What exactly are support and resistance?

Support level: When the price drops to a certain area, more buyers come in, increasing buying pressure, which stops the price from falling further and may even trigger a rebound.

Resistance level: When the price rises to a certain area, more sellers come in, increasing selling pressure, which stops the price from rising further and may even lead to a price drop.

However, support and resistance are not fixed; they can be broken and may switch roles.

✅ Breaking through support: For example, if the price drops below 15 yuan, it indicates that buying pressure cannot hold, and the original support level may turn into a new resistance level. If the price later rebounds to 15 yuan, it may encounter selling pressure.

✅ Breaking through resistance: For example, if the price breaks above 25 yuan, it indicates strong buying pressure. The original resistance level may turn into a new support level. If the price later pulls back to 25 yuan, there may be buying support.

How to trade using support and resistance?

You can use support and resistance as trading references, but don't fixate on a single line.

✅ Buy low at support: When the price approaches the support level and you see signs of stabilization, such as a rebound on increased volume, you can consider buying low.

❌ Recklessly chasing resistance: When the price reaches a resistance level, blindly chasing higher prices can likely lead to getting trapped.

✅ Buy on breakthrough: If the price breaks through the resistance level on increased volume, it may be a signal to rise. You can consider following the trend.

❌ Holding on without stop-loss: Once support is effectively broken, you should stop-loss as necessary. Don't fantasize that the main forces will pull you back.

Support and resistance are not all-powerful; trading should have a big-picture perspective.

Just looking at support and resistance is not enough; you also need to consider factors like trading volume, trends, and market sentiment. More importantly, control your hands and avoid impulsive trading!

Before entering the market, ask yourself:

✅ Have I controlled the risks?

✅ Have I set my stop-loss?

✅ Is my trading logic clear?

There will always be people making money in the market.