What Is a Worked Example of Support and Resistance?

Direct answer: a worked example of support resistance

A worked example of support and resistance is a step-by-step scenario where you (1) mark two horizontal price areas from past candles, (2) state assumptions about how “touches” are counted, and (3) run a simple calculation to show what changes when price breaks one level. The key is transparency: the example must explicitly define the chart inputs (timeframe, how wide a “level area” is, and what counts as a test) and avoid assuming that historical behavior will repeat.

Mechanism or definition

Support and resistance are recurring price areas seen on a chart where buying pressure (support) or selling pressure (resistance) has historically slowed down price movement. In practice, analysts usually draw them as ranges, not single ticks, because markets rarely respect exact prices.

A “worked example” typically includes these components:

Chart basis: which timeframe and candle type you used.
Level width assumption: how you define the tolerance around a price (for example, a small band).
Test definition: what counts as a meaningful touch (for example, wick reaching the level versus a candle closing through it).
Outcome definition: what would count as a “break” (for example, a close beyond the level by more than the tolerance).

Evidence or example (scenario with numbers)

Assume the following fixed setup so every step is checkable:

You are looking at a chart where each candle has a high and low.
You define a level area as ±1.0 price unit around a visually chosen level.
You count a test when a candle’s high/low reaches the level area, but you do not require a strict reversal.
You define a breakout/breakdown when a candle closes beyond the level area (not just wicks).

Step 1: Identify levels from past price

From a historical segment of the chart (your reader can verify by looking at the same candles):

Resistance is set at 100.0 because multiple candles’ highs reach 99.0–101.0, and closes tend to stay below 100.0.
Support is set at 90.0 because multiple candles’ lows reach 89.0–91.0, and closes tend to stay above 90.0.

At this point, the mechanics are descriptive: you are not claiming a future outcome, only describing where price has paused within your tolerance.

Step 2: Run a simple range calculation

Using the same assumptions, compute the visible range:

Range width = Resistance − Support = 100.0 − 90.0 = 10.0 price units.

This number is not a prediction. It is just the distance between the two marked areas.

Step 3: Hypothetical event showing how the “worked example” operates

Suppose that later a candle occurs with:

Close at 88.5.

Under the break definition, this is a breakdown because 88.5 is below the support area’s lower edge (90.0 − 1.0 = 89.0). With the same chart evidence mindset, you would then update your interpretation:

The old support (90.0) may cease to behave like support under your chosen criteria.
A common descriptive expectation is that the broken level can act differently later, but you must treat this as a hypothesis to test on the next visible candles.

Step 4: One transparent risk-style arithmetic figure (no trading advice)

If you choose a hypothetical reference point:

Entry reference = 88.5
“Buffer” to the old support area = 89.0 (the top edge of the breakdown condition)

Then the distance from entry reference to that edge is:

89.0 − 88.5 = 0.5 price units.

This is purely arithmetic using the stated tolerance. It does not account for costs or position sizing and does not imply an investable plan.

Limitations and risks (material failure modes)

Level selection is subjective: different analysts may draw different levels depending on timeframe and what they treat as a meaningful “touch. ” Even with the same definition, humans vary. 2) Levels shift with time: a level that held for one period can become irrelevant as participants and volatility conditions change. 3) Wicks vs closes: if you confuse a wick touch (intrabar) with a closing break, you can misclassify tests using the wrong rule. 4) Charts hide execution realities: real results depend on bid/ask spreads, slippage, and order execution.