The "Trap" and Proper Usage of Support and Resistance Levels

Especially in a bull market, don't get caught by "standard drawing lines." Here is a key summary:
1. The Root Cause of Most People's Losses: Drawing Support and Resistance Levels "Too Precisely"
- In a bull market, what you think is a "support level" is actually the area where retail investors' consensus is most concentrated.
- Major players will use these "standard support levels" to shake out traders: you buy, then it drops; after you cut losses, it rises again. It's not bad luck, but your drawing exposes retail positions, turning support levels into a "liquidity tool" for the big players.
2. The Underlying Logic of Support/Resistance Levels: Not "Lines," but "Crowd Behavior"
- Prices themselves won't rebound or fall; support levels are formed because "many people think this is a good buy, so they buy," and similarly for resistance, "many people think it's time to sell, so they sell."
- In a bull market, the stronger the consensus, the easier it is for support levels to be broken—because the big players wait for retail investors to cluster at these points, then reverse and harvest.
3. Three "Traps" When Using Support/Resistance Levels in a Bull Market—Avoid Them!
1. Don't use them to guess the lowest point: bull market corrections won't perfectly hit the line; chasing "precise bottoms" will only lead to repeated shakeouts.
2. Don't use them to prove technical accuracy: the market doesn't reward "precise drawing," only "staying alive."
3. Don't go against the trend: the biggest risk in a bull market is "getting out too early." Don't panic sell just because support levels are temporarily broken.
4. Proper Use of Support/Resistance Levels (Exclusive to Bull Markets)
1. Assess the trend quality:
- Healthy correction: gradual decline, decreasing volume, hesitation near support levels "then pulled back" → trend can still rise, hold confidently.
- Dangerous correction: volume surges, high volatility, sharp oscillations at support levels → may be a false rebound, avoid blindly bottom-fishing.
2. Help you "hold your positions":
- As long as "key support levels are not effectively broken," don't be shaken out by normal pullbacks. Making big money in a bull market depends on "holding on," not "guessing precisely."
3. Bull Market Position Adding Logic:
- Don't "buy more as it falls"; wait for support to be "confirmed" before adding (e.g., price retraces to support zone and consolidates with decreasing volume, indicating exhausted sellers).
5. How to Use Resistance Levels in a Bull Market: "Manage Expectations," Not "Short Selling"
- Resistance levels are "deceleration zones," not "walls." When approaching resistance, don't rush to short; instead, lower expectations for "short-term rapid rise," and avoid contrarian moves within the trend.
In summary: Support and resistance levels are not "predictive tools," but "behavior filters." In a bull market, don't obsess over "drawing accuracy"; instead, think about "who will give in first at this level"—understanding this is the real key to mastering support and resistance levels.