How to Start Trading with Technical Analysis (Beginner’s Guide)
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Why you must understand support and resistance before you trade
Before we place a single trade in crypto or stocks, we need to understand support and resistance. At the core, this comes down to the basic law of supply and demand.
Price doesn’t pause or bounce at certain levels by accident. It happens because those levels are where people who want to buy (demand) and people who want to sell (supply) collide in size. Areas where buyers consistently win tend to form support, while zones where sellers keep overwhelming buyers turn into resistance.
In a 24/7, highly volatile market like crypto, these support and resistance zones become reference points we can rely on in the middle of chaotic price swings. You’re not just drawing a few lines on a chart you’re asking,
“How have market participants reacted around this price in the past?”
Reading support and resistance is essentially reading the footprints of supply, demand, and crowd psychology on the chart. That’s why understanding these levels is one of the very first skills you need to build if you want to trade crypto or stocks with any consistency.
--
Support and resistance are not just lines you draw wherever the price has “touched a lot,” like in the typical examples you see on charts.
Why not?
If you look closely at past price action, the zones where support or resistance keeps showing up are always places where someone’s interests are heavily involved.
Some participants have accumulated a large position around that price and need to defend their average entry.
Others want to quietly accumulate in that area over time.
→ So when price comes back down, buy orders step in around that zone and a support level forms.
On the flip side:
Some traders see a certain area as “a good place to unload” and wait there with sell orders,
And traders who are stuck from buying near the top are often eager to get out at breakeven or with a small loss when price revisits that zone.
→ As a result, resistance forms there, and it becomes harder for price to push higher.
That explains why certain zones have acted as support or resistance in the past.
But the next question we must ask is:
“Are support and resistance levels from 1–2 years ago still valid today?”
Why is that such an important question?
Because a chart doesn’t only have a price axis (Y) — it also has a time axis (X).
As time passes:
The players who were defending that level may have closed or reduced their positions,
The overall mix of market participants may have changed completely,
And price may have broken above, below, and through that level many times,
gradually diluting its significance compared to the past.
That’s why support and resistance shouldn’t be drawn just as
“places where price touched a lot before,”
but rather as
“places where supply and demand are still likely to concentrate now.”
In other words, you’re not only asking “Where did price react?”
You’re also asking “Is there still a good reason for the market to care about this level today?”
--
So we need to adjust the way we define support and resistance.
Instead of just re-using levels where “price touched a lot in the past,”
we focus on zones where, after a strong rally or a sharp drop,
price makes its first strong pullback or bounce.
Why are these areas so important?
Because they are the zones where recent supply and demand have collided the most aggressively.
After a big move up, the first strong dip that gets bought up shows a price area where
buyers are still saying: “If price comes back here, I’m happy to buy aggressively.”
After a big move down, the first strong bounce shows a price area where
sellers are still saying: “If price comes back up here, I’m happy to sell into it.”
As we mentioned earlier, a chart doesn’t only have a price axis (Y) —
it also has a time axis (X).
That means, when we look at support and resistance, it’s more logical to focus on
“the most recent levels where the market reacted strongly”
rather than just
“the oldest levels that were touched many times.”
Old support levels, over time, can lose their power:
The players who used to defend that level may have already closed or reduced their positions,
The composition of market participants may have changed completely,
And repeated breaks above and below that level may have gradually diluted its importance.
In contrast, the most recent support and resistance zones:
Reflect the latest state of supply and demand, and
Show you where today’s traders are actually willing to buy and sell right now.
In other words, they are levels that are “more alive,”
because they incorporate both price and time.
That’s why, in real trading,
instead of clinging to very old levels, it’s far more useful to first mark
the zones where price made its first strong pullback or bounce after a major move.
Those are the areas that help you read current, active supply and demand,
and they tend to give you much more meaningful support and resistance in today’s market.
--
Of course, there are countless ways to analyze the market.
And as we just discussed, even “freshly formed” support and resistance levels don’t last forever.
At some point those levels will break, price will move into a new area, and it’s completely natural to update your chart with new support and resistance zones.
Even so, just by doing what you see in the image above – splitting the recent range based on the latest support and resistance –
you can already get a very intuitive sense of whether price is temporarily expensive or cheap.
We do this by using a Parallel Channel:
The upper half becomes the Premium Zone
The lower half becomes the Discount Zone
1. Premium vs Discount – training your eye to look at “location” first
Once you divide the range like this,
the very first thing you check when you open a chart is:
“Where is price sitting right now?”
If price is in the Premium Zone
→ It means that, relative to the recent box/trend, price is in a more expensive area.
→ In this zone, instead of blindly chasing new longs,
You might think about taking profits or scaling out of existing long positions, or
Look for mean-reversion shorts / corrective moves rather than fresh break-out longs.
If price is in the Discount Zone
→ It means that, within the same range, price is sitting in a cheaper area.
→ Here,
If the higher-timeframe trend is up, this is where you look for dip-buying / long entries, and
If you’re already short, this is where you start thinking about locking in profits or reducing risk.
In other words, the Premium/Discount split acts as a location filter that quickly answers:
“At this price area, does it make more sense to be looking for longs or for shorts?”
2. Learning to trade only from “good locations”
A common mistake for beginners is entering trades without any regard for location,
just reacting to a few candles.
Price is already near the top of the Premium Zone,
→ but a couple of green candles appear and FOMO kicks in → chase a long.
Price is already near the bottom of the Discount Zone,
→ but a few red candles print and fear kicks in → chase a short.
When you trade like this, your risk–reward structure is broken from the start.
Your stop can’t be tight, and your upside is limited because you’re trading in the worst part of the range.
If you first split the range with a parallel channel, the order of thinking changes:
Check location first,
Then look for entry signals (patterns, candles, FVG, structure shifts, etc.).
That tiny change in sequence turns
“pressing buttons anywhere” → into → “only fighting from good locations,”
and it massively upgrades the overall quality of your trades.
3. Looking at it again from a supply–demand perspective
From a more theoretical point of view:
Near the bottom of the Discount Zone,
the market has recently decided, “If price falls this low, it’s cheap.”
→ This is where demand (buy orders) is likely to show up again.
Near the top of the Premium Zone,
the market has treated that area as “expensive enough to take profits.”
→ This is where supply (sell orders) is likely to reappear.
So by splitting the range into Premium and Discount with a parallel channel,
you’re effectively seeing how recent supply and demand are tilted
without using any complicated indicator — just clean price action and location.
4. One-line summary
Treat support and resistance as zones, not thin lines.
Divide that zone with a parallel channel into Premium and Discount.
Decide on the favorable side first, and only then look for concrete entry and exit signals inside it.
Once you do this,
“Which area is cheap today, and which area is expensive?” becomes much clearer in your mind,
and you’ll naturally avoid taking random trades in the messy middle where your psychology and PnL both suffer.
--
Let’s say price is currently sitting in the Premium Zone,
but your RSI just flashed an “oversold” signal.
(Much later we’ll go deeper into indicators, so for now you can simply think of RSI as a tool that sometimes marks potential highs and lows on the chart.)
A lot of beginners see this and immediately think:
“RSI is oversold → price must be cheap → time to go long.”
But with our framework, this is actually a situation where
location and indicator are telling you two different stories.
Location view (Premium Zone)
→ “Within the recent range, this is an expensive area.
→ I should be more focused on taking profits, fading rallies, or waiting for a deeper discount,
not blindly chasing fresh longs.”
RSI view (oversold)
→ “Price has dropped sharply in the short term and might be due for a bounce.”
So an RSI oversold signal inside the Premium Zone often means:
“Price is having a short-term pullback within an expensive area,”
not
“This is a structurally cheap level where I should load up.”
In other words, it may simply be a dip in a larger down move or distribution area,
rather than a high-probability bottom.
By contrast:
RSI oversold near the bottom of the Discount Zone
= “Cheap area + oversold signal”
→ Much stronger candidate for a meaningful short-term low.
That’s why, in practice, it’s safer to:
Check location first (Premium or Discount),
Then look at oscillator signals like RSI, MACD, Stoch, etc. as secondary confirmation.
For now, just keep this rule of thumb in mind:
Only take indicator signals seriously when they line up with a good location.
That simple filter alone will help you avoid a lot of impulsive trades where
You buy high just because an indicator said “oversold,” or
Sell low just because it flashed “overbought.”
(We’ll cover RSI and other indicators in detail later, including
how to combine them with location to build much higher-quality entries and exits.)
--
In the end, what really matters is a simple question:
“Is price expensive here, or cheap here?”
Put differently:
Is this an area where sell supply is likely to show up,
or an area where buy demand is likely to step back in?
That’s the first thing you want to figure out.
If we boil down everything we’ve talked about so far into a few key points:
Treat support and resistance not as thin lines, but as zones where supply and demand have actually clashed.
Use those zones to carve out Premium (expensive) / Discount (cheap) areas.
Inside those areas, decide first where it makes sense to fight from (which side is favored: long or short),
And only then start paying attention to indicators, patterns, or candle signals.
Most people start their journey by asking,
“Which indicator is the best?”
“Which pattern has the highest win rate?”
But with just a bit of experience, you eventually arrive at the same conclusion:
“Where you enter (location)
matters more than what you enter with (signal).”
When you enter from a good location:
You can keep your stop loss tighter.
The same profit feels much easier to hold through.
Even if the trade loses, you can at least say, “I took the trade from a logical area,” which helps your psychology.
When you enter from a bad location:
No matter how “nice” the indicator looks, your stop tends to be wide,
A small move against you immediately stresses your mindset,
And even when the trade is in profit, it feels like you could get slapped the other way at any moment, so it’s hard to hold with conviction.
So here’s a simple practical checklist you can take into your own trading:
Find the most recent support and resistance zones where price reacted clearly and meaningfully.
From that structure, draw a Parallel Channel or box,
and split it into a Premium zone (upper half) and a Discount zone (lower half).
Check first: is price currently in the Premium side or the Discount side?
Only after that:
Look at oscillators like RSI, MACD, Stochastics,
And patterns, structure shifts, FVGs, candles, etc.
as secondary tools for entries and exits, not primary drivers.
Simply not chasing longs near the top of the Premium zone,
and not chasing shorts near the bottom of the Discount zone,
is enough to noticeably improve the quality of your trades.
At the end of the day, the chart is asking you something very basic:
“At this price level,
based on the recent structure, is this
cheap enough that people want to buy,
or expensive enough that people want to sell?”
If you can answer that question first,
then all the other tools that come afterward — RSI, MACD, FVGs, patterns, order blocks, ICT concepts, you name it —
become tools you use at meaningful locations, not random signals on a random chart.
If you can’t answer that question,
and you just keep adding more tools on top,
your trading usually becomes more complicated on the screen,
while your account and your mindset quietly get worn down in the background.
In the next parts, we’ll go into:
How to layer oscillators like RSI and Stochastics on top of this location framework, and
How to design actual entry, stop-loss, and take-profit plans using these ideas.
But before that, if you only take one thing away from this section, let it be this:
“Always ask first: is this area expensive or cheap?”
That one question alone
can dramatically upgrade the quality of the trade you’re about to take when you hit that buy or sell button.
--
If this was useful for your trading, consider giving it a Boost (🚀) and leaving a quick comment (💬).
That kind of interaction helps me know what’s working and motivates me to keep posting.
You’re welcome to follow so you don’t miss the next idea.
--
Why you must understand support and resistance before you trade
Before we place a single trade in crypto or stocks, we need to understand support and resistance. At the core, this comes down to the basic law of supply and demand.
Price doesn’t pause or bounce at certain levels by accident. It happens because those levels are where people who want to buy (demand) and people who want to sell (supply) collide in size. Areas where buyers consistently win tend to form support, while zones where sellers keep overwhelming buyers turn into resistance.
In a 24/7, highly volatile market like crypto, these support and resistance zones become reference points we can rely on in the middle of chaotic price swings. You’re not just drawing a few lines on a chart you’re asking,
“How have market participants reacted around this price in the past?”
Reading support and resistance is essentially reading the footprints of supply, demand, and crowd psychology on the chart. That’s why understanding these levels is one of the very first skills you need to build if you want to trade crypto or stocks with any consistency.
--
Support and resistance are not just lines you draw wherever the price has “touched a lot,” like in the typical examples you see on charts.
Why not?
If you look closely at past price action, the zones where support or resistance keeps showing up are always places where someone’s interests are heavily involved.
Some participants have accumulated a large position around that price and need to defend their average entry.
Others want to quietly accumulate in that area over time.
→ So when price comes back down, buy orders step in around that zone and a support level forms.
On the flip side:
Some traders see a certain area as “a good place to unload” and wait there with sell orders,
And traders who are stuck from buying near the top are often eager to get out at breakeven or with a small loss when price revisits that zone.
→ As a result, resistance forms there, and it becomes harder for price to push higher.
That explains why certain zones have acted as support or resistance in the past.
But the next question we must ask is:
“Are support and resistance levels from 1–2 years ago still valid today?”
Why is that such an important question?
Because a chart doesn’t only have a price axis (Y) — it also has a time axis (X).
As time passes:
The players who were defending that level may have closed or reduced their positions,
The overall mix of market participants may have changed completely,
And price may have broken above, below, and through that level many times,
gradually diluting its significance compared to the past.
That’s why support and resistance shouldn’t be drawn just as
“places where price touched a lot before,”
but rather as
“places where supply and demand are still likely to concentrate now.”
In other words, you’re not only asking “Where did price react?”
You’re also asking “Is there still a good reason for the market to care about this level today?”
--
So we need to adjust the way we define support and resistance.
Instead of just re-using levels where “price touched a lot in the past,”
we focus on zones where, after a strong rally or a sharp drop,
price makes its first strong pullback or bounce.
Why are these areas so important?
Because they are the zones where recent supply and demand have collided the most aggressively.
After a big move up, the first strong dip that gets bought up shows a price area where
buyers are still saying: “If price comes back here, I’m happy to buy aggressively.”
After a big move down, the first strong bounce shows a price area where
sellers are still saying: “If price comes back up here, I’m happy to sell into it.”
As we mentioned earlier, a chart doesn’t only have a price axis (Y) —
it also has a time axis (X).
That means, when we look at support and resistance, it’s more logical to focus on
“the most recent levels where the market reacted strongly”
rather than just
“the oldest levels that were touched many times.”
Old support levels, over time, can lose their power:
The players who used to defend that level may have already closed or reduced their positions,
The composition of market participants may have changed completely,
And repeated breaks above and below that level may have gradually diluted its importance.
In contrast, the most recent support and resistance zones:
Reflect the latest state of supply and demand, and
Show you where today’s traders are actually willing to buy and sell right now.
In other words, they are levels that are “more alive,”
because they incorporate both price and time.
That’s why, in real trading,
instead of clinging to very old levels, it’s far more useful to first mark
the zones where price made its first strong pullback or bounce after a major move.
Those are the areas that help you read current, active supply and demand,
and they tend to give you much more meaningful support and resistance in today’s market.
--
Of course, there are countless ways to analyze the market.
And as we just discussed, even “freshly formed” support and resistance levels don’t last forever.
At some point those levels will break, price will move into a new area, and it’s completely natural to update your chart with new support and resistance zones.
Even so, just by doing what you see in the image above – splitting the recent range based on the latest support and resistance –
you can already get a very intuitive sense of whether price is temporarily expensive or cheap.
We do this by using a Parallel Channel:
The upper half becomes the Premium Zone
The lower half becomes the Discount Zone
1. Premium vs Discount – training your eye to look at “location” first
Once you divide the range like this,
the very first thing you check when you open a chart is:
“Where is price sitting right now?”
If price is in the Premium Zone
→ It means that, relative to the recent box/trend, price is in a more expensive area.
→ In this zone, instead of blindly chasing new longs,
You might think about taking profits or scaling out of existing long positions, or
Look for mean-reversion shorts / corrective moves rather than fresh break-out longs.
If price is in the Discount Zone
→ It means that, within the same range, price is sitting in a cheaper area.
→ Here,
If the higher-timeframe trend is up, this is where you look for dip-buying / long entries, and
If you’re already short, this is where you start thinking about locking in profits or reducing risk.
In other words, the Premium/Discount split acts as a location filter that quickly answers:
“At this price area, does it make more sense to be looking for longs or for shorts?”
2. Learning to trade only from “good locations”
A common mistake for beginners is entering trades without any regard for location,
just reacting to a few candles.
Price is already near the top of the Premium Zone,
→ but a couple of green candles appear and FOMO kicks in → chase a long.
Price is already near the bottom of the Discount Zone,
→ but a few red candles print and fear kicks in → chase a short.
When you trade like this, your risk–reward structure is broken from the start.
Your stop can’t be tight, and your upside is limited because you’re trading in the worst part of the range.
If you first split the range with a parallel channel, the order of thinking changes:
Check location first,
Then look for entry signals (patterns, candles, FVG, structure shifts, etc.).
That tiny change in sequence turns
“pressing buttons anywhere” → into → “only fighting from good locations,”
and it massively upgrades the overall quality of your trades.
3. Looking at it again from a supply–demand perspective
From a more theoretical point of view:
Near the bottom of the Discount Zone,
the market has recently decided, “If price falls this low, it’s cheap.”
→ This is where demand (buy orders) is likely to show up again.
Near the top of the Premium Zone,
the market has treated that area as “expensive enough to take profits.”
→ This is where supply (sell orders) is likely to reappear.
So by splitting the range into Premium and Discount with a parallel channel,
you’re effectively seeing how recent supply and demand are tilted
without using any complicated indicator — just clean price action and location.
4. One-line summary
Treat support and resistance as zones, not thin lines.
Divide that zone with a parallel channel into Premium and Discount.
Decide on the favorable side first, and only then look for concrete entry and exit signals inside it.
Once you do this,
“Which area is cheap today, and which area is expensive?” becomes much clearer in your mind,
and you’ll naturally avoid taking random trades in the messy middle where your psychology and PnL both suffer.
--
Let’s say price is currently sitting in the Premium Zone,
but your RSI just flashed an “oversold” signal.
(Much later we’ll go deeper into indicators, so for now you can simply think of RSI as a tool that sometimes marks potential highs and lows on the chart.)
A lot of beginners see this and immediately think:
“RSI is oversold → price must be cheap → time to go long.”
But with our framework, this is actually a situation where
location and indicator are telling you two different stories.
Location view (Premium Zone)
→ “Within the recent range, this is an expensive area.
→ I should be more focused on taking profits, fading rallies, or waiting for a deeper discount,
not blindly chasing fresh longs.”
RSI view (oversold)
→ “Price has dropped sharply in the short term and might be due for a bounce.”
So an RSI oversold signal inside the Premium Zone often means:
“Price is having a short-term pullback within an expensive area,”
not
“This is a structurally cheap level where I should load up.”
In other words, it may simply be a dip in a larger down move or distribution area,
rather than a high-probability bottom.
By contrast:
RSI oversold near the bottom of the Discount Zone
= “Cheap area + oversold signal”
→ Much stronger candidate for a meaningful short-term low.
That’s why, in practice, it’s safer to:
Check location first (Premium or Discount),
Then look at oscillator signals like RSI, MACD, Stoch, etc. as secondary confirmation.
For now, just keep this rule of thumb in mind:
Only take indicator signals seriously when they line up with a good location.
That simple filter alone will help you avoid a lot of impulsive trades where
You buy high just because an indicator said “oversold,” or
Sell low just because it flashed “overbought.”
(We’ll cover RSI and other indicators in detail later, including
how to combine them with location to build much higher-quality entries and exits.)
--
In the end, what really matters is a simple question:
“Is price expensive here, or cheap here?”
Put differently:
Is this an area where sell supply is likely to show up,
or an area where buy demand is likely to step back in?
That’s the first thing you want to figure out.
If we boil down everything we’ve talked about so far into a few key points:
Treat support and resistance not as thin lines, but as zones where supply and demand have actually clashed.
Use those zones to carve out Premium (expensive) / Discount (cheap) areas.
Inside those areas, decide first where it makes sense to fight from (which side is favored: long or short),
And only then start paying attention to indicators, patterns, or candle signals.
Most people start their journey by asking,
“Which indicator is the best?”
“Which pattern has the highest win rate?”
But with just a bit of experience, you eventually arrive at the same conclusion:
“Where you enter (location)
matters more than what you enter with (signal).”
When you enter from a good location:
You can keep your stop loss tighter.
The same profit feels much easier to hold through.
Even if the trade loses, you can at least say, “I took the trade from a logical area,” which helps your psychology.
When you enter from a bad location:
No matter how “nice” the indicator looks, your stop tends to be wide,
A small move against you immediately stresses your mindset,
And even when the trade is in profit, it feels like you could get slapped the other way at any moment, so it’s hard to hold with conviction.
So here’s a simple practical checklist you can take into your own trading:
Find the most recent support and resistance zones where price reacted clearly and meaningfully.
From that structure, draw a Parallel Channel or box,
and split it into a Premium zone (upper half) and a Discount zone (lower half).
Check first: is price currently in the Premium side or the Discount side?
Only after that:
Look at oscillators like RSI, MACD, Stochastics,
And patterns, structure shifts, FVGs, candles, etc.
as secondary tools for entries and exits, not primary drivers.
Simply not chasing longs near the top of the Premium zone,
and not chasing shorts near the bottom of the Discount zone,
is enough to noticeably improve the quality of your trades.
At the end of the day, the chart is asking you something very basic:
“At this price level,
based on the recent structure, is this
cheap enough that people want to buy,
or expensive enough that people want to sell?”
If you can answer that question first,
then all the other tools that come afterward — RSI, MACD, FVGs, patterns, order blocks, ICT concepts, you name it —
become tools you use at meaningful locations, not random signals on a random chart.
If you can’t answer that question,
and you just keep adding more tools on top,
your trading usually becomes more complicated on the screen,
while your account and your mindset quietly get worn down in the background.
In the next parts, we’ll go into:
How to layer oscillators like RSI and Stochastics on top of this location framework, and
How to design actual entry, stop-loss, and take-profit plans using these ideas.
But before that, if you only take one thing away from this section, let it be this:
“Always ask first: is this area expensive or cheap?”
That one question alone
can dramatically upgrade the quality of the trade you’re about to take when you hit that buy or sell button.
--
If this was useful for your trading, consider giving it a Boost (🚀) and leaving a quick comment (💬).
That kind of interaction helps me know what’s working and motivates me to keep posting.
You’re welcome to follow so you don’t miss the next idea.
Haftungsausschluss
Die Informationen und Veröffentlichungen sind nicht als Finanz-, Anlage-, Handels- oder andere Arten von Ratschlägen oder Empfehlungen gedacht, die von TradingView bereitgestellt oder gebilligt werden, und stellen diese nicht dar. Lesen Sie mehr in den Nutzungsbedingungen.
Haftungsausschluss
Die Informationen und Veröffentlichungen sind nicht als Finanz-, Anlage-, Handels- oder andere Arten von Ratschlägen oder Empfehlungen gedacht, die von TradingView bereitgestellt oder gebilligt werden, und stellen diese nicht dar. Lesen Sie mehr in den Nutzungsbedingungen.