Gold Education
Reading Charts
Trend, Support and Resistance
Three ideas cover most of what a chart can honestly tell you: which way it has been going, and the prices it keeps stopping at.
Trend: which way has it been going?
An uptrend is a series of higher highs and higher lows. A downtrend is the opposite. Everything else — the majority of the time — is a range: the price moving sideways between two boundaries. Naming which of the three you are looking at is the first honest thing a chart gives you.
Support and resistance
- Support — A price area where falls have repeatedly stopped, because buyers step in there.
- Resistance — A price area where rallies have repeatedly stalled, because sellers step in there.
- They swap roles — Once resistance is broken and the price holds above it, that same level often becomes support.
Levels are memory, not magic
A level works because enough people remember it and act on it — nothing more. That is also why levels eventually break: when the reason people were defending that price stops applying, the line stops holding.
How to use this without fooling yourself
- Draw zones, not lines — A level is an area a few points wide, not one exact price.
- Fewer lines is better — If a chart needs eight lines to make sense, the pattern is in your head, not in the market.
- Wait for the close — A wick through a level is not a break; a candle closing beyond it is the evidence.
- Context beats the chart — A rate decision or a CPI print will move gold straight through any line you have drawn.
See the forces behind the levels
Charts show what happened. The four forces lesson explains why.