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Support and resistance

Support and Resistance

אנליזה טכנית

Definition

Price levels where the market has previously stopped or reversed. Support is a level below the price where buyers entered, and resistance is a level above it where sellers entered. A broken level tends to switch roles.

Detailed explanation

A strong level is one that has been tested multiple times, with volume, and on a high timeframe. In index futures, levels like the previous day's high and low, the session open, and round numbers attract many orders. In a prop account, these levels are mainly the logical place to put a drawdown: beyond a level that invalidates the idea, and not at an arbitrary distance chosen to fit the quantity.

An example from the prop world

ES stopped twice this week at 6,050 and dropped. The third time it breaks the level and closes above it. A trader waiting for a retest of 6,050 from above now sees it as support, and places their drawdown below it.

TradingView

Charting and technical analysis platform

Volume Weighted Average Price (VWAP)

The average price of the day, weighted by the volume traded at each price. It resets at the beginning of each session, and day traders use it as a fairness line: a price above it is considered strong, and a price below it is considered weak.

Fair Value Gap (FVG)

An area on the chart where the price moved so quickly that a gap remained. In a three-candle bullish pattern, when the low of the third candle is higher than the high of the first candle, the range between them is the FVG (and vice versa in a downtrend). ICT and Smart Money traders expect the price to return to the area before continuing.

סטופ לוס

An exit order that closes a losing trade at a predetermined level. In a prop account, a stop is not just good risk management: it's what separates a bad trade from crossing the drawdown threshold and failing the account.