What are the sources for resistance and support?

<p id="isPasted">In trading, resistance and support are primarily derived from market memory and the collective behavior of participants. These levels are not exact points but rather zones where the forces of supply and demand are expected to shift.&nbsp;</p><p><strong>1. Historical Price Action</strong></p><p>The most reliable source for these levels is past price behavior.&nbsp;</p><ul><li>Previous Peaks and Troughs: Significant highs (where the price stopped rising) become resistance, while significant lows (where it stopped falling) become support.</li><li>Role Reversal: A broken resistance level often flips to become a new support level (and vice versa) because traders who missed the move look to enter on a retest.</li><li>Consolidation Zones: Areas where the price moved sideways for an extended period create "sticky" zones that act as future barriers. </li></ul><p><strong>2. Psychological Levels</strong></p><p>Human psychology and the tendency to "anchor" to specific numbers create natural barriers.&nbsp;</p><ul><li>Round Numbers: Levels like $50, $100, or $1.2000 in Forex are major psychological hurdles where institutional and retail orders tend to cluster.</li><li>Historical Extremes: 52-week highs/lows and all-time highs are closely watched by almost all market participants, strengthening their impact as resistance or support. </li></ul><p><strong>3. Volume-Based Sources</strong></p><p>Unlike price-only indicators, volume profiles reveal where actual financial commitment occurred.&nbsp;</p><ul><li>High Volume Nodes (HVN): Price levels with dense trading activity represent "fair value" and often act as strong support or resistance.</li><li>Point of Control (POC): The single price level with the highest traded volume for a session is a major magnet and balance point. </li></ul><p><strong>4. Dynamic Indicators</strong></p><p>Some levels move along with price and time rather than remaining fixed at a specific horizontal price.&nbsp;</p><ul><li>Moving Averages (MA): The 50-day and 200-day MAs are the most common "dynamic" support/resistance levels used by institutional traders.</li><li>Bollinger Bands: The upper and lower bands act as dynamic volatility-based boundaries.</li><li>Trendlines: Sloping lines connecting a series of higher lows (uptrend support) or lower highs (downtrend resistance). </li></ul><p><strong>5. Mathematical Calculations</strong></p><ul><li>Pivot Points: Use the previous day's high, low, and close to mathematically derive seven potential support and resistance lines (S1, S2, S3, PP, R1, R2, R3).</li><li>Fibonacci Retracements: Based on mathematical ratios (38.2%, 50%, 61.8%), these identify potential reversal points after a major move. </li></ul>