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How To Draw Support and Resistance Levels Like A

Professional
Nial Fuller

In my daily Forex commentary each day, I draw in the key

levels of support and resistance that I feel are the most
significant in the current market environment. It’s something
that I’ve done for so long it really only takes me a few minutes
to do now, it really is a very logical and simple task for me and
it can be for you too.

Many traders make the process of drawing support and

resistance levels a lot more difficult than it needs to be. After
you have a general idea of how I draw my support and
resistance levels, you should have no problem using that
knowledge as a guideline to draw the levels yourself. We get
tons of emails each week from traders asking how to properly
draw support and resistance levels on their charts. Also, we
get emails with chart attachments from traders who are
clearly drawing far too many levels on the charts, thus complicating the process of price action trading and
confusing themselves as well.

Today’s lesson is going to be a tutorial of how I draw my levels in the market. Basically, I’m going to take you guys
on a ride through my brain (scary I know) as I decide where to draw support and resistance levels on some real-
time daily charts. You can use this lesson as a reference until you feel comfortable enough drawing the levels on
your own. Also, it will help you to make your own commentary each day of your favorite markets; writing down your
analysis rather than keeping it all in your head is a good way to stay on track and make sure you have a clear plan
for the week and day ahead. To get started, let’s clear up a few common myths about drawing support and
resistance levels…

Common myths about drawing support and resistance levels:

Myth 1: You should draw every level you can find on your charts – Many traders fall into this trap, they end up
taking an hour to draw on every little level they can find. What they end up with is a really messy chart that
basically does more harm than good. You need to learn to draw only the significant levels on your charts, then
you’ll have a useful framework to work from.

Myth 2: Your S/R (support and resistance) levels should always be drawn across the exact highs or lows of price
bars – This is perhaps the biggest myth that traders have about drawing levels on their charts. Often times,
support and resistance are more “zones” than exact “levels”, sometimes you will have a key level that is indeed
an exact level, but more often than not we are going to be drawing our support and resistance lines midway
through bar tails or even through the body of a bar sometimes. Point being, you don’t always have to draw the
level exactly through the high or low of the bar. Note: if you are totally new and confused by some of the lingo
here, please take some time to go over this candlestick tutorial before moving on.

Myth 3: You should go back really far in time with your levels – Unless you are a long-term buy-and-hold investor
right now, you don’t need to go back more than about 8 months when drawing your levels. If you look at our free
forex commentary you can see we really only focus on the last 3 to 6 months when drawing in the daily levels, and
that goes for my own personal trading too. I am not sitting there trying to draw in levels from the last 5 years like
some traders…you are wasting your time if you’re doing this.
OK! Now that we’ve cleared up those common myths about drawing S/R levels on your charts, let’s move on to
some “meat”:

How I draw support and resistance levels on my charts:

Below are examples of how I would draw the relevant support and resistance levels on some of the major Forex
pairs, Gold, Crude Oil and Dow Futures as they stand at the time of this writing. Above each chart is a brief
explanation of why I drew the levels where I did.

Example 1: EURUSD DAILY CHART

Here we are looking at the current euro / dollar daily chart. You’ll note the red lines highlight the longer-term or
“key” levels and the blue lines highlight the shorter-term or “near-term” levels. This is how all the examples will be
in this lesson and hopefully it will make it easier for you to differentiate between what I often refer to as “key”
levels from shorter-term levels that aren’t quite as significant.

In this example, you can see this market is clearly in a trading range right now between about 1.3140-70
resistance and 1.2830 support. Those are what I would call the “key levels” on this current daily EURUSD chart.
Within the range, we have some shorter-term levels that are still significant albeit less so than the key levels just
discussed. Of special note are the two shorter-term resistance levels marked on the chart below. You will see that
the one near 1.3070 is hitting a bar high from October 5 th, but also it’s going through the bodies and middle of the
tails of the bars from October 17th – 23 rd. This brings up a good point…a support or resistance level can be
significant even if it isn’t exactly touching bar highs and lows. This is also seen at the key resistance of the range,
note how the line through 1.3140 is not touching the exact highs on September 14th and 17th at 1.3171…this
brings up the point that sometimes support or resistance is more of a “zone” than a strict / exact level. In this case
the resistance of the current range is really a small zone of resistance from 1.3140 to about 1.3171 (more on
support / resistance “zones” soon).

Also of note, there was an inside bar on October 18 th, and after the market broke down from that inside bar it tried
to rotate back up to about where it broke down at, and this breakdown level acted as resistance and held the
market off from advancing further, and then as we can see the market has since fallen away from that level. These
are some of the more subtle things you need to learn about when drawing in your levels…especially shorter-term
levels; that inside bar breakdown point held as a resistance, and often inside bar breakout points will act as
support or resistance, even if it’s just for the short-term.
Example 2: GBPUSD DAILY CHART

Here’s a good exercise for you to work on: When marking support and resistance levels on your charts, mark the
longer-term “key” levels first and then draw the shorter-term levels. This will work to give you a framework for the
current market conditions and gives your analysis some routine as well.

One of the things I often write about is support or resistance “zones”, as often a support or resistance is not really
an exact level but more of a zone. In the example below, we can see a very good example of a resistance zone
that occurs between about 1.6270 and 1.6310.

“Key” support or resistance levels are generally levels that price rejected forcefully and that gave rise to a
significant move up or down, or they can be levels that have contained or supported price many times. Whereas,
shorter-term levels give rise to smaller movements and tend to break easier. We can see good examples of both
in the GBPUSD daily chart below:
Example 3: AUDUSD DAILY CHART

In this example we are looking at the AUDUSD daily chart and we can see currently the market is in a large
trading range between about 1.0612 and 1.0175. We classify 1.0612 as “key resistance” since it has caused
significant turning points in the market and held on the last two tests. Similarly, 1.0175 is “key support” because it
has led to significant turning points in the market and held on about the last 4 tests. The shorter-term level through
1.0410 is clearly significant, but again it’s not “quite” as significant as the two levels just mentioned. As you can
see, some of drawing in your levels and deciding which is more important than the other can be left up to your
own interpretation, but at the same time you should have a logical line of reasoning such as “this level has held
price more times”, or “that level created a larger move”, etc.
Example 4: USDJPY DAILY CHART

In the USDJPY example below, we are looking at all “key levels” because I did not see any that I considered to be
short-term levels. The reason being, every level I’ve drawn in has created a significant turning point. The
USDJPY most recently has been breaking higher, and if the resistance near 80.37 gives way we will likely see
another leg higher.

Of special note in this chart are the bar tails or wicks. Note how some of the levels are not drawn exactly at the bar
highs or lows but rather through the middle portion of the tail. This is important, and it’s one of the myths I
mentioned at the start of this lesson; you don’t always have to draw your S/R levels exactly at a bar high or low. In
fact, it’s more important to have a lot of tails touching a level than it is to have a level exactly at two or three bar
highs or lows. An example of this is the level at 78.79 in the chart below; note how I drew it through as many bar
tails (or wicks) that I could, rather than moving it further up and just hitting the exact highs of a couple bars.
Drawing your levels in this manner gives you a better reference point to look for signals from since you are getting
closer to the mean or average turning point price in the market, so it’s basically a higher-probability level than a
level that’s further out but exactly at a bar high or low. That’s not to say you will never draw S/R levels at exact
highs or lows, because you will, a lot, but it just means you don’t always have to draw them that way and won’t
always want to.
Example 5: NZDUSD DAILY CHART

In the NZDUSD chart below we want to take note of what I refer to as a “value area”. Now, what I mean by “value
area” is basically just an area where it’s obvious that price “likes” to be. This is essentially just another word for
consolidation, since an area of consolidation on a chart is essentially where a market has found “fair value”.
These value areas typically act as support or resistance zones, and this means when price retraces back to them
you can watch for price action trading strategies forming at them. You will also sometimes have existing support or
resistance levels that basically run right through the center of a value area, showing about the middle of the value
area, and we can see this clearly by the blue line in the chart below. In this specific NZDUSD example that blue
value line would be a good support to watch for buy signals if price rotates lower soon.
Example 6: USDCAD DAILY CHART

The USDCAD daily chart below shows us a good example of the “value” concept that I discussed in the last
example. Note how price formed that area of consolidation or “value” marked on the chart below, and then later
price retraced back up to it and found resistance exactly at the center of the value near 0.9883 on October 3rd.
Then, after price finally broke back above that value level it formed a price action setup after it retraced back
down to it, as we can see an inside pin bar combo setup formed showing rejection of that same level.

So, here’s a very simple strategy for you; wait for a key level to break, then wait for price to retrace back to it and
look for a price action setup entry trigger to form near the breakout level in the direction of the initial breakout.
Example 7: EURJPY DAILY CHART

We can see in the EURJPY chart below that it’s been in an uptrend since about the end of July. This uptrend has
had some pretty large counter-trend retraces, which of course we need to mark with levels. We can see in the
chart below the support levels and zones left behind by the different points in the market were the retrace ended
and the uptrend resumed. Also, in a trending market like this, we can watch the previous swing points for price
action signals as the market retraces back to them. For example, in an uptrend we can look for price action entries
at the previous resistance / swing points in the market which turn into support after price breaks up past them. We
can see a clear example of this in the chart below with the recent pin bar trading strategy that formed at the
shorter-term support through 102.50 area, note that this level was previous resistance.
Example 8: XAUUSD DAILY CHART

In the Gold chart below, you can see I’ve gone back about 8 months in drawing in my long-term levels. This is
about the farthest back I typically go when drawing in my levels on the daily charts. Again, longer-term “key levels”
are those levels that clearly caused a significant change of direction in price and / or held strong on multiple tests
across time. Shorter-term levels are those that caused less significant price direction changes and may be
“newer” levels. You don’t have to get carried away drawing in too many of the shorter-term levels though, just use
common sense and decide which are the most obvious and draw those in. If you put too many support and
resistance levels on your charts you’ll end up with a messy chart that just confuses you and might even cause you
not to trade because you think there are too many levels for the market to have to move through.

This brings me to a very important point you should remember: In an up-trending market, resistance levels will
often break, and in a down-trending market support levels will often break. I say that because I get a lot of emails
from traders telling me they can’t get a proper 1:2 or more risk reward ratio because there are too many support or
resistance levels in the way. Well, you have to look at the market context that your trade setup has formed in and
use some common sense and discretion…not every little level you find is significant.
Example 9: DJ30 DAILY CHART

In the Dow Jones futures chart below, we can see the current picture of key levels that are relevant for this
market. Of special note, we can see how consistently these key levels hold as price retraces back to them.
Knowing that price often bounces or repels from key levels is a very valuable piece of information. Indeed, a big
portion of my trading theory revolves around waiting patiently for an obvious price action setup to form at a key
chart level as the market retraces back to it. If you observe this chart for a few minutes, you’ll begin to see how
accurate these levels are in rejecting, it really is uncanny.
Example 10: WTI DAILY CHART

In the example below, we are looking at the current Crude Oil chart. This chart shows us a very important lesson.
Note the pin bar marked on the chart below, it was an obvious pin bar that showed forceful rejection of a key
resistance level, and then the market chopped around about 6 days before finally moving lower. The most obvious
stop loss placement on that pin bar would have been just above its high which was also the key resistance
through $93.65 area. If you enter an obvious price action setup like that and you’ve placed your stop loss at a
logical spot in-line with the existing market structure, there’s no reason to panic if the market moves against you
and almost stops you out. This exact scenario was very likely in this Crude oil pin bar setup, and I know some
traders who panicked when price moved against them. Had they just stayed in the market, their initial stops just
above the key resistance would not have been hit and they would have made a killing. Lesson: trust your stops if
you’ve placed them beyond a key support or resistance level or in another logical place.
Conclusion:

I hope you now have a better idea of how I draw support and resistance levels on my charts and why I draw them
where I do. I suggest you try drawing the relevant levels on your charts now according to what you’ve learned in
today’s lesson. Also, follow my daily Forex commentary for a good daily example of how I draw the levels on a
major market each day.

Determining where to draw your support and resistance levels is really not as difficult as many traders make it out
to be. When in doubt, slow down and take a step back, ask yourself if a level your about to put on your chart
makes sense and why. If it makes logical sense you should be able to easily explain why to someone who has no
trading experience. For example, you might say “This level is important because it clearly caused price to make a
significant change of direction recently”. If you just take a logical approach to drawing in your support and
resistance levels you will save yourself a lot of time and frustration in the end. Don’t be one of those traders with
so many lines on their charts you can’t figure out what’s happening. If you would like more help with drawing
support and resistance levels and how to use them in combination with price action strategies, checkout my Forex
price action trading course for more in-depth instruction.

About Nial Fuller

Nial Fuller is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a
monthly readership of 250,000+ traders and has taught 15,000+ students since 2008. Checkout Nial’s Forex
Course here.