# Support, resistance and breakouts > Mark the prices where the market turned before, and see why a breakout can be real or a trap, and what a level can and cannot tell you. - Course: [Trading Basics: How It Works, How Not to Lose Everything](https://productovi.com/courses/trading.md) - Module: What is a price chart telling me? - Lesson 19/32, ~26 min - Source: https://productovi.com/courses/trading/levels-and-breakouts ## Where the price keeps turning **Alex Tutor:** Back on your Pebble practice account, today we draw lines on a chart. Here are 60 days of Bluefin Energy, autumn 2025. Look at where the price kept stopping. ![A stone bounces between a rope floor and a rope ceiling, pokes above the ceiling and drops back, then later crosses and rests on top. Nora reaches for the poke; Marc waits.](https://productovi.com/courses/trading/diagrams/m5-l3-scene.png) **Dataset (CSV):** [Bluefin Energy, 60 daily candles](https://productovi.com/datasets/trading/levels-and-breakouts/m5_bfe_levels.csv) Practice market data on Pebble. Prices in dollars, volume in shares. **Bluefin Energy, daily high, low and close** | date | High | Low | Close | | --- | --- | --- | --- | | 2025-09-01 | 40.24 | 39.53 | 39.65 | | 2025-09-02 | 40.05 | 39.43 | 39.96 | | 2025-09-03 | 40.38 | 39.71 | 40.22 | | 2025-09-04 | 40.4 | 39.99 | 40.15 | | 2025-09-05 | 40.84 | 40.07 | 40.65 | | 2025-09-08 | 40.8 | 40.09 | 40.17 | | 2025-09-09 | 42 | 39.97 | 41.55 | | 2025-09-10 | 41.63 | 39.88 | 40.01 | | 2025-09-11 | 40.12 | 39.47 | 39.53 | | 2025-09-12 | 39.66 | 38.77 | 38.85 | | 2025-09-15 | 38.98 | 38.42 | 38.5 | | 2025-09-16 | 38.65 | 38.49 | 38.49 | | 2025-09-17 | 39.35 | 38.44 | 39.19 | | 2025-09-18 | 39.94 | 38.99 | 39.81 | | 2025-09-19 | 40.01 | 38.76 | 38.96 | | 2025-09-22 | 39.11 | 38 | 38.55 | | 2025-09-23 | 38.99 | 38.47 | 38.91 | | 2025-09-24 | 40.08 | 38.74 | 39.83 | | 2025-09-25 | 40.52 | 39.68 | 40.32 | | 2025-09-26 | 40.92 | 40.18 | 40.81 | | 2025-09-29 | 40.88 | 40.6 | 40.81 | | 2025-09-30 | 41.19 | 40.61 | 41.08 | | 2025-10-01 | 41.95 | 40.83 | 41.4 | | 2025-10-02 | 41.56 | 40.18 | 40.4 | | 2025-10-03 | 40.56 | 39.59 | 39.84 | | 2025-10-06 | 39.95 | 39.46 | 39.53 | | 2025-10-07 | 39.63 | 39.02 | 39.22 | | 2025-10-08 | 39.68 | 39.06 | 39.47 | | 2025-10-09 | 39.71 | 38.71 | 38.93 | | 2025-10-10 | 39.13 | 38.05 | 38.5 | | 2025-10-13 | 39.39 | 38.34 | 39.17 | | 2025-10-14 | 40.25 | 38.98 | 40.13 | | 2025-10-15 | 40.21 | 39.54 | 39.65 | | 2025-10-16 | 39.88 | 39.56 | 39.73 | | 2025-10-17 | 40.47 | 39.48 | 40.36 | | 2025-10-20 | 42 | 40.21 | 41.3 | | 2025-10-21 | 41.62 | 41.24 | 41.62 | | 2025-10-22 | 41.62 | 41.34 | 41.53 | | 2025-10-23 | 41.59 | 41.21 | 41.43 | | 2025-10-24 | 41.69 | 41.34 | 41.69 | | 2025-10-27 | 42.6 | 41.4 | 41.5 | | 2025-10-28 | 41.63 | 39.29 | 39.48 | | 2025-10-29 | 39.76 | 39.41 | 39.7 | | 2025-10-30 | 39.92 | 39.49 | 39.71 | | 2025-10-31 | 39.91 | 39.52 | 39.65 | | 2025-11-03 | 40.31 | 39.45 | 40.1 | | 2025-11-04 | 40.25 | 39.32 | 39.42 | | 2025-11-05 | 40.79 | 39.22 | 40.6 | | 2025-11-06 | 40.75 | 40.19 | 40.4 | | 2025-11-07 | 40.8 | 40.33 | 40.69 | | 2025-11-10 | 43.1 | 40.59 | 42.9 | | 2025-11-11 | 43.12 | 42.4 | 42.62 | | 2025-11-12 | 43.1 | 42.49 | 42.89 | | 2025-11-13 | 43.01 | 42.37 | 42.58 | | 2025-11-14 | 43.31 | 42.37 | 43.08 | | 2025-11-17 | 43.33 | 42.93 | 43.16 | | 2025-11-18 | 43.22 | 42.75 | 42.85 | | 2025-11-19 | 43.02 | 42.68 | 42.76 | | 2025-11-20 | 43.53 | 42.63 | 43.37 | | 2025-11-21 | 43.49 | 42.74 | 42.91 | **Nora:** Easy. It bounced between 38 and 42 for two months. **Alex Tutor:** Right. A price where falls kept stopping is called **support**: here, 38.00. A price where rises kept stopping is **resistance**: 42.00. The highs reached it three times in the first 40 days, the lows reached 38 twice. ![In the first 40 days the highs stopped at about 42.00 three times (resistance) and the lows at about 38.00 twice (support).](https://productovi.com/courses/trading/diagrams/m5-l3-support-resistance.png) *Levels show where the price turned before, nothing more.* **Sofia:** Why would the price care about 42? **Alex Tutor:** Nobody knows for sure. One common explanation: people remember where the price turned and place orders near those prices. Treat a level as a place where the price turned before, nothing more. It's a zone of a few cents, not a wall. **Marc:** I mark levels from the data before I look at my own position. If I draw them after I've bought, I somehow always find a support just under my price. > **Exercise:** Look at the first 40 days of Bluefin Energy (2025-09-01 to 2025-10-24). What is the highest high, the resistance level, in dollars? **Alex Tutor:** Before we look at the breakout, one statement about what a level actually is. > **Exercise:** Resistance on Bluefin Energy is 42.00. On 2025-10-01 the high stopped at 41.95, so the level "didn't work" that day. ## A breakout that wasn't **Alex Tutor:** A **breakout** is when the price leaves the range and keeps going. Now look at 2025-10-27. **Nora:** That was my day! I had a buy stop order at 42.10, just above resistance, for 50 shares. The price hit 42.60 and I was in. Then it fell back. **Alex Tutor:** High 42.60, close 41.50. It poked above the level and closed back inside the range the same day. That's a **false breakout**. The next day it fell to 39.48. **Nora:** Nobody warned me! **Alex Tutor:** The chart couldn't have. During that morning, a false breakout and a real one look exactly the same. The difference shows only at the close, or days later. > **Exercise:** On 2025-10-27 Bluefin Energy had high 42.60 and close 41.50, with resistance at 42.00. What was it? **Sofia:** How much did Nora lose that day? **Nora:** I panicked and sold at the close, 41.50. The costs were 3 dollars for the round trip. **Alex Tutor:** Work it out: the price difference times the shares, then the costs. > **Exercise:** Nora bought 50 shares at 42.10 and sold them at 41.50. Costs were 3.00 for the round trip. What was her result, in dollars? Use a minus sign for a loss. ## Waiting for the close **Nora:** Thirty-three dollars isn't that much. **Alex Tutor:** On a 10,000 practice account, it's small. The habit isn't: a buy stop above every level gets filled by every poke, and each false breakout charges this toll again. **Marc:** My rule is different: I only count a breakout if a day closes above the level. A poke during the day doesn't count. **Alex Tutor:** In this file, no day closed above 42.00 until 2025-11-10, which closed at 42.90. In the nine days after it, the lowest low was 42.37: the old ceiling held as a floor, this time. **Nora:** So Marc's way is just better? **Alex Tutor:** It's a trade-off. Waiting skips some false breakouts, but you enter later and higher: 42.90 instead of 42.10. And a close above can fail too. One example proves nothing; you'd need 30 or more breakouts to compare the two ways. **Alex Tutor:** Put a number on that later entry. How much more does waiting cost on 50 shares? > **Exercise:** Nora's buy stop would enter at 42.10. Marc waits for a daily close above 42.00, which first came on 2025-11-10 at 42.90. For 50 shares, how many dollars more does Marc pay to get in, before costs? **Alex Tutor:** One more detail. Volume on the false breakout was 280,324 shares, almost three times the usual 99,000. On the real breakout it was 155,646. Big volume shows many shares changed hands, not who turned out right. ![2025-10-27 poked to 42.60 and closed at 41.50 on the biggest volume, 280,324: Nora lost 33. 2025-11-10 closed above at 42.90 on 155,646, and the lows held at 42.37 or higher.](https://productovi.com/courses/trading/diagrams/m5-l3-false-and-real.png) *The poke and the real breakout looked alike until the close.* > **Exercise:** In this file, the day with the biggest volume was the breakout that lasted. **Sofia:** Then what is a level good for? **Alex Tutor:** Planning. If you buy because support held, a close well below 38 says the idea was wrong. A level gives your plan a place to be wrong, and that's where a stop can go, which you may know from the risk module. **Alex Tutor:** Let's try that on the floor of the box. Where would a plan built on support be wrong? > **Exercise:** In the Bluefin Energy range, support is 38.00 and resistance 42.00. A plan buys at 38.40 because support held. Where does the level suggest the plan is proven wrong? **Marc:** I still note volume in my journal. I just never let it overrule the close. > **Exercise:** What can a support or resistance level tell you? Choose all that apply. **Nora:** Marc's way sounds slow. **Marc:** Slow is fine. I'd rather miss the first 80 cents than pay for every poke. **Alex Tutor:** Your turn to weigh the two ways. > **Exercise:** Compare Nora's way (a buy stop just above 42.00) with Marc's way (wait for a daily close above 42.00) on this data. In 2–3 sentences, say what each gains and loses. > **Key ideas** > > - **Support:** where falls kept stopping (38.00). **Resistance:** where rises kept stopping (42.00). A level is a zone of a few cents. > - A **breakout** leaves the range and keeps going; a **false breakout** pokes out and closes back inside. > - Nora's buy stop at 42.10 was filled by the false breakout: −33 after costs. > - Waiting for a close above the level avoids some traps but enters later (42.90). Judge either way on 30+ breakouts. > - Big volume doesn't tell a real breakout from a false one. A level shows the past, not the future. > **Educational, not advice** > > This course explains how trading works; it never tells you what to buy or sell. Most people who trade lose money, and you can lose all of it. For taxes and rules, ask a licensed professional where you live. - Previous lesson: [Trend and range](https://productovi.com/courses/trading/trend-and-range.md) - Next lesson: [Case: mark up a chart and write the plan](https://productovi.com/courses/trading/mark-up-a-chart.md) --- Productovi Learning. Free, no sign-up needed to read.