In Season 3, Episode 7 of our series, we dove into a fascinating discussion about the hidden power of a simple line chart—specifically, an H4 (4-hour) line chart—and how it can reveal insights that often go unnoticed. One of the key takeaways from that episode was the concept of identifying a critical price level where significant market action occurs. This isn’t just any random line on the chart; it’s a level where we observed multiple turning points—those moments where price either peaked and reversed downward or bottomed out and rallied upward. What’s striking is that these turning points, whether they originated from above or below, consistently clustered around a single, identifiable level. For the sake of clarity, let’s call it “the level”—a legitimate, observable marker that stands out amidst the noise of candlestick data.
Now, here’s the thing: there’s no precise, scientific formula dictating where this level should sit. It’s not like we’re plugging numbers into an equation and getting a definitive answer. Instead, it’s more of an art—a best-fit line drawn through the chaos of price action, guided by the historical behavior of the candles on your chart. You look at the highs, the lows, the moments of indecision, and you find a level that seems to tie it all together. Once identified, this level becomes a kind of staging ground—a focal point where the market has shown it’s willing to react before, and where it might just react again. The idea is simple: by marking this level, you’re preparing yourself to watch what happens when price approaches it in the future.
But before we get too caught up in the excitement of this discovery, let’s pause and take a step back. Traders love to slap labels on these levels. Depending on the context—specifically, which side of the level the price turned from—people will call it “support” if it held price from falling further, or “resistance” if it capped an upward move. It’s a natural instinct to categorize things this way; it gives us a sense of order in the unpredictable world of trading. But here’s the question: does it really matter what you call it? Is the label “support” or “resistance” actually helping you, or is it just a comforting story you tell yourself? The truth is, attaching these terms to a level can create a false sense of security, lulling you into thinking you’ve got the market figured out when, in reality, you might be missing the bigger picture.
At its core, the chart doesn’t care about your labels. It’s indifferent to whether you see a level as a floor or a ceiling. What matters isn’t the name you give it, but the behavior price has exhibited there in the past. Has price turned at this level before? Has it broken through, only to come back and retest it later? These are the questions that cut through the noise. The level itself is just a reference point—a line in the sand where history has shown something meaningful tends to happen. Whether it’s a reversal, a breakout, or a period of consolidation, the chart is telling you to pay attention, not to get hung up on terminology.
So why do we cling to labels like “support” and “resistance” in the first place? Part of it is psychological. Naming something gives us a sense of control, a framework to predict what’s coming next. But that’s where the danger lies. By pigeonholing a level into one of these categories, you risk blinding yourself to the full range of possibilities. At the end of the day, when price reaches your level, it’s only going to do one of three things—and none of them depend on what you’ve decided to call it.
First, price might bounce. This could manifest as a clean rejection—perhaps forming a double top if it’s coming from above, or a double bottom if it’s rising from below. It’s the classic reversal scenario traders dream of, where the level holds firm and sends price packing in the opposite direction. Second, price might hesitate and dance along the level for a while. This could play out as consolidation, maybe even tracing out a pattern like a descending triangle if the pressure’s coming from above, or an ascending triangle if it’s building from below. It’s the market taking a breather, testing the waters before deciding its next move. Third, price might just plow right through. A breakout happens, and then—because markets love to toy with us—price often comes back to retest the level from the other side, sometimes offering a textbook entry candle for the observant trader.
This is where our humble H4 line chart shines. By focusing on these turning points, we strip away the clutter and zero in on what matters: the level itself. It’s not about predicting the future with certainty; it’s about setting the stage. You draw your line, you wait for price to return, and you watch what unfolds. The beauty of this approach is its simplicity—it doesn’t require fancy indicators or complex systems. It’s just you, the chart, and a level that’s proven its relevance through past price action.
So, here’s the challenge: free yourself from the myth of “support” or “resistance.” Let go of the need to box your level into one of those categories. In truth, it’s neither—and it’s both. Price has likely bounced on both sides of it at some point in history, which proves the point: the chart doesn’t care, and neither does price. The level is just a magnet, drawing price back to test it again and again. What happens when it gets there is anyone’s guess, but that’s the thrill of the game.