Trends, Support and Resistance
Higher highs, lower lows, and the levels where reactions cluster.
Written and reviewed by the Fundezy team · how we produce this
Markets spend their time in one of two regimes: trending (directional drift) or ranging (oscillation between levels). Most losing beginner trades come from using trend tactics in ranges, or range tactics in trends.
Defining a trend objectively
Skip intuition; use structure:
- Uptrend = a sequence of higher highs and higher lows (HH/HL).
- Downtrend = lower highs and lower lows (LH/LL).
- Range = highs and lows at roughly constant levels.
On the platform, switch EUR/USD to H1 and mark the last five swing highs and lows. If you can't say which structure you're in, you don't have a trade — you have a guess.
Support and resistance
Support is a zone where buying has repeatedly overwhelmed selling; resistance where selling has repeatedly won. They are zones, not lines — price overshoots them slightly, which is why "support at 1.0850" really means "the 1.0840–1.0860 area".
Two properties matter more than any pattern:
- More touches = more meaningful. A level respected five times carries more information than one respected twice.
- Broken resistance becomes support (and vice versa). When price finally breaks a level and holds beyond it, the level's role flips — old sellers are gone, new buyers defend their entries.
Trading with levels
The highest-value combination is trend + level alignment:
- Uptrend → buy pullbacks into rising support (this is exactly what a BUY LIMIT is for — Course 01).
- Downtrend → sell rallies into falling resistance.
- Range → buy the floor, sell the ceiling, and stand aside when a break comes.
The trap: drawing too many lines
A chart with 15 levels always "explains" the past and predicts nothing. Keep it to the 2–3 most obvious zones — the ones you'd spot without squinting. If a level needs a paragraph to justify, the market doesn't know about it.
By the numbers
Technical analysis is not a fringe habit: the survey literature reviewed by Menkhoff and Taylor (Journal of Economic Literature, 2007) finds the large majority of foreign-exchange professionals use it at some trading horizon. The framework itself is old — Charles Dow's editorials around 1900 formalised trends as sequences of higher highs and higher lows, the objective definition this lesson teaches.
Practice in the simulator
Mark swing highs/lows on the H1 chart — apply what you just read with simulated money.
Check your understanding
3 questions · answer all, then submit.