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Support and Resistance in Practice
How do I draw support and resistance on a daily crypto chart and use it without fooling myself?
As of November 2026: mark zones where price turned at least twice, then fix entry, stop and target before you buy. A broken zone often flips role.
Module 2 · Chapter 6 of 10 · ~5 min read · Tax and law facts as of November 2026
Last chapter, you named a chart as trending or ranging, and you learned that levels are bands, not lines. Now the practical question: how do you draw those bands on a daily chart without fooling yourself? Every price below is illustrative, not live, and we use Solana (SOL), a large crypto coin.
6.1 Start from a chart you already named a range
Open a daily chart, where each candle is one day, and zoom out to about three months.
Zones work best in a range, where price keeps returning to the same floor and ceiling. Our example is a SOL range that has held for two months.
6.2 Mark zones where price turned at least twice
Scan for places where price reversed with a clear move away. A zone needs at least two clean turns, and three is better.
Tomatoes at your sabzi mandi sell for ₹30 to ₹40 a kilo, not exactly ₹35, and a zone is a usual band like that.
Draw the band over the wicks and bodies of the turns, and a wick is the thin line showing a day's extreme.
SOL turned up from ₹13,100 to ₹13,300 on three separate days. That band is support, a zone where buyers have stepped in before.
Higher up, price turned down twice from ₹14,600 to ₹14,900. That band is resistance, a zone where sellers have stepped in before.
Weigh a zone by its touches, since three clean turns beat one sharp wick.
6.3 Round numbers, and why they matter
Traders like round prices such as ₹13,000 or ₹15,000, so orders bunch there. A study of currency orders by Carol Osler (Journal of Finance, 2003) found orders bunched at round numbers. A 2017 study by Andrew Urquhart found Bitcoin trade prices cluster at round numbers too. Neither shows price must turn there, so treat it as a habit, not a law.
Use a round number as a tiebreaker only: our support band starts just above ₹13,000, which adds some weight. A round number with no turns is not a zone.
6.4 Turn a zone into entry, stop and target
A zone helps only when it gives you a plan before you enter: entry, stop and target.
Wait for price to return to the zone; do not chase it after a bounce. Put the stop, an automatic exit below your entry, beyond the far edge of the zone. Put the target at the foot of the next zone.
Reward-to-risk is the rupees you could gain divided by the rupees you could lose. Settle it before entering, while you are calm.
Every row uses reward-to-risk = (target - entry) / (entry - stop), ignoring costs.
| Setup | Entry, stop, target | Risk | Reward | Ratio |
|---|---|---|---|---|
| Plan at the zone | ₹13,300, ₹12,900, ₹14,600 | ₹400 | ₹1,300 | 3.25 |
| Target set short | ₹13,300, ₹12,900, ₹13,900 | ₹400 | ₹600 | 1.50 |
| Chased entry | ₹13,900, ₹12,900, ₹14,600 | ₹1,000 | ₹700 | 0.70 |
Moving the entry from ₹13,300 to ₹13,900 cut the ratio from 3.25 to 0.70, so a chased entry risks more than it can earn.
6.5 When a zone breaks, support becomes resistance
Zones do break, so wait for a daily close below the band. Then wait for the next candle to stay below, as last chapter taught.
Broken support often turns into resistance, because traders who bought there sell near their cost when price climbs back.
Say SOL closes at ₹12,700 two days running. The band from ₹13,100 to ₹13,300 is now a ceiling to watch, and the old plan is cancelled.
This flip is a pattern, not a rule, so size every trade as if it may fail.
This chapter is educational only. It is not tax, legal or investment advice. Check current rules with a chartered accountant.
Next: volume and what it confirms.
Key takeaways
- A zone needs at least two clean turns, and more turns make it stronger.
- Draw support and resistance as bands that cover the wicks.
- A round number adds weight only where price has already turned.
- Put the stop beyond the zone, not at it.
- Reward-to-risk is decided before entry, and fees and tax shrink it.
- A broken zone often flips role, but treat that as a pattern, not a rule.
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Educational & illustrative only — not investment advice. Drishti Pro publishes AI-generated trade ideas and their public track record for information. Crypto is volatile and you can lose money. Nothing here is a recommendation to buy or sell any asset. Do your own research.
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