Support and Resistance in Trading

Definition

Support is a price area below the current price where buying has, in the past, been strong enough to slow or stop a fall. Resistance is a price area above the current price where selling has, in the past, been strong enough to slow or stop a rise.

Two things matter from the start. First, support and resistance are areas, not exact lines. Price rarely reacts at one precise number — it reacts somewhere within a zone around it. Second, they describe what has happened before, not what's guaranteed to happen next. Calling an area "support" means price has reacted there in the past — not that it has to react there again.

When price pushes through a support area and keeps falling, that support has broken. And once it breaks, that same area often flips and acts as resistance if price climbs back to it later (and the reverse for broken resistance). This flip is one of the most common things you'll see in price — but like everything here, it's a tendency, not a rule.

Why It Matters

Support and resistance are two of the most-used ideas in all of trading, because they give price some structure. Instead of treating every price as equally important, they point to the areas where reactions have tended to cluster.

But their value is in setting expectations, not in giving you certainty. Knowing an area has acted as support before tells you a reaction has been more likely there in the past — it does not tell you price will hold there this time. So the useful question isn't "Will this level hold?" It's "How often has price actually held at areas like this in the past?"

Here's the idea with no math. Say price drops to about the same area three times over a few weeks and bounces every time. That area is acting as support — buyers keep stepping in around there. But the fourth visit isn't guaranteed to bounce. Sometimes the area gives way and price keeps falling. Both results — the bounce and the break — are part of the record, and an honest study counts both.

How Support and Resistance Form

Support and resistance tend to form around previous highs and lows, areas where a lot of trading happened, and other spots where price spent a lot of time. Whatever the reason they form, the useful point is this: these areas can be spotted and studied objectively.

MPM's focus is on measuring what has actually happened around these areas — not on guessing why.

Traditional View vs the MPM Framework

MPM labels its price areas as Support (S1, S2, S3) and Resistance (R1, R2, R3) because those are terms traders already know. But behind that familiar labelling, the zones themselves are worked out using MPM's own statistical methodology — not drawn by hand on a chart.

What MPM Has Measured

Within MPM, support and resistance areas are studied as MPM Zones — price areas identified by MPM's own methodology, with the historical reactions around them measured.

MPM does not assume a support or resistance area will hold. Instead, it looks at how similar zones have actually behaved across thousands of past interactions: how often price reached the zone (Reach), and once there, how often it held versus broke (Reaction).

Across all those interactions, support and resistance zones held on the first touch 61.3% of the time on average. Here's the breakdown by zone (S1–S3 are support areas at increasing distance below price; R1–R3 are resistance areas at increasing distance above):

There's a clear pattern in the support zones and the nearer resistance zones: hold rates sit in the mid-50s to high-60s, and the nearest zones (S1 and R1) hold a bit less often than the ones a little further out. Each of these rests on hundreds to well over a thousand interactions, so the numbers are solid.

The furthest resistance zone (R3) is the one exception, and we're calling it out on purpose. Price reaches it so rarely that there are only 11 interactions on record — far too few to trust. Its hold rate looks high, but with a sample that small, a single different outcome would swing it a lot. So we don't claim it as a finding. It's shown here only for completeness, and clearly flagged as too thin to rely on. That's the rule MPM applies everywhere: a number only becomes a "finding" when there's enough data behind it to stand on.

Common Misconceptions

"A support level is a price that will hold."

No. Support is an area where price has reacted before. In the past, some tests hold and some break. Treating support as a sure thing ignores every time it has failed.

"The more times a level is tested, the stronger it gets."

Often repeated, but not reliably true. Some people say repeated tests make a level stronger; others say each test uses up the orders defending it and makes it weaker. The honest answer is: it depends — and assuming "more tests = stronger" as a rule isn't backed up.

"Support and resistance are exact lines."

No — they're areas. Price regularly overshoots or falls short of a drawn line by a fair bit, which is exactly why MPM treats them as zones instead of single prices.

"If a level breaks, the move will keep going."

Not always. A break can lead to a bigger move, but price also often comes back to re-test the broken area and then reverses (that's the flip we mentioned earlier). A break is the start of a question, not the answer.

Limitations

Support and resistance are historical tendencies, not laws. How reliably an area holds depends on the timeframe, the market, how choppy or calm things are, how the area was picked, and the history you're looking at. The same line can look strong on one timeframe and mean nothing on another.

Historical hold rates can also shift as markets change over time. That's why MPM treats support and resistance as measured evidence — not as fixed lines that must be respected, and not as a promise that any single area will hold next time.

How This Fits Into MPM

Support and resistance connect directly to MPM's core work, because MPM Zones are statistically worked-out areas where reactions have clustered in the past — which is exactly what support and resistance describe in everyday trading language.

You'll see the idea show up in:

• Daily Analysis — each session's published MPM Zones are the support and resistance areas for that market, with their Reach and Reaction context.
• Reaction Library — where past reactions around MPM Zones (both the holds and the breaks) are documented.
• Research Papers — where market behaviours are tested against historical data.
• Intelligence Circle — which takes the published research further with deeper investigations.

MPM's bigger goal is to measure how price has actually behaved around these areas — rather than drawing lines by eye and hoping they hold.