NISM-Series-XV: Research Analyst · Technical Analysis

Trends, Support and Resistance in Technical Analysis

Updated 11 October 2026 · Fact-checked

A trend is the general direction of price: up, down or sideways. Support is a price zone where buying tends to stop a fall. Resistance is a zone where selling tends to stop a rise. To solve questions, identify the trend, mark the levels, and check for breakouts and role reversal.

Understand Trends, Support and Resistance

A trend is the general direction in which a price moves over time. In an uptrend, prices make higher highs and higher lows. In a downtrend, prices make lower highs and lower lows. In a sideways trend (range), prices move between roughly the same highs and lows without a clear direction.

Trends are also classed by duration: primary (long, months to years), secondary (intermediate corrections within the primary trend) and minor (short-term). Technical analysts follow the idea that a trend is more likely to continue than to reverse until there is evidence otherwise.

Support is a price level or zone where demand is strong enough to halt a decline. Resistance is a level or zone where supply is strong enough to halt a rise. They are zones, not exact prices. The more times a level is tested and holds, the more significant it is considered.

A trendline joins swing points. In an uptrend, draw it under the rising lows; it acts as dynamic support. In a downtrend, draw it over the falling highs; it acts as dynamic resistance. A valid trendline needs at least two points, and a third touch confirms it. A channel adds a parallel line on the other side: for an uptrend, a line through the highs parallel to the rising-lows trendline. Price moves inside the channel.

Role reversal (polarity) means that when support is broken decisively, it often becomes resistance. When resistance is broken decisively, it often becomes support. The reason is that traders who were trapped or who missed the move act when price returns to the old level. A breakout is more reliable when it comes with high volume and a closing price beyond the level.

Key formulas to remember

Uptrend: Higher highs + higher lows; Trendline is drawn below the lows and acts as support.
Downtrend: Lower highs + lower lows; Trendline is drawn above the highs and acts as resistance.
Sideways trend: Price oscillates between support and resistance; No clear higher or lower swing sequence.
Trendline points: Minimum 2 points to draw; 3rd touch confirms; More touches and longer duration give greater significance.
Role reversal: Broken support → new resistance; broken resistance → new support; Applies when the break is decisive, ideally with high volume.
Channel: Trendline + parallel line through opposite swing points; A break of either line signals a change in momentum or trend.

How to solve Trends, Support and Resistance questions

Use this method for any question on trends, support and resistance.

1Read the price description and note the sequence of highs and lows.
2Classify the trend: higher highs and lows is up, lower highs and lows is down, flat range is sideways.
3Identify the relevant line: trendline under lows for uptrend, over highs for downtrend.
4Locate support and resistance levels from previous swing lows and highs.
5Check whether price has broken a level: look for a close beyond it and for volume.
6If a level is broken decisively, apply role reversal.
7Match the conclusion to the option wording; reject options that say a level is exact or guaranteed.

Quickest way: Highs, lows, break, flip

When to use it: For short MCQs with a price sequence or a definition.

Compare each high and low with the previous one to get the trend.
Uptrend means line below price; downtrend means line above price.
If a level breaks, flip its role: support becomes resistance and the reverse.
Prefer options that use words like 'tends to' or 'zone' over 'always' or 'exact'.

Common mistakes in Trends, Support and Resistance

Drawing an uptrend line through the highs
Mixing up which swing points define the trend.
Fix: Uptrend line goes under the lows; downtrend line goes over the highs.
Treating support and resistance as exact prices
Textbook diagrams show single lines.
Fix: Think of them as zones; a marginal intraday penetration does not always mean a break.
Forgetting role reversal
Students see a broken level as finished.
Fix: After a decisive break, flip the level's role.
Calling a two-point line a confirmed trendline
Two points always make a line.
Fix: Two points draw it; a third touch confirms it.
Calling a flat range 'no trend' and ignoring it
Students think a trend must be up or down.
Fix: Sideways is a recognised trend type, bounded by support and resistance.
Accepting any breakout as valid
Ignoring volume and closing price.
Fix: A breakout with high volume and a close beyond the level is more reliable; weak breaks may be false.

Worked examples

Example 1

A stock's successive swing highs are ₹120, ₹112, ₹105 and its swing lows are ₹100, ₹94, ₹88. Identify the trend and where a trendline would be drawn.

Show the solution

Highs fall: 120, 112, 105, so they are lower highs.
Lows fall: 100, 94, 88, so they are lower lows.
Lower highs and lower lows define a downtrend.
A downtrend line is drawn over the highs and acts as resistance.

Answer: Downtrend; the trendline joins the swing highs above price and acts as resistance.

Example 2

A share repeatedly fell to ₹250 and bounced. It then closes at ₹240 on very high volume, and later rallies back to ₹250 and falls again. What does this show?

Show the solution

₹250 held several times, so it was support.
A close at ₹240 on high volume is a decisive break of support.
Role reversal says broken support becomes resistance.
The later rally to ₹250 meeting selling confirms it now acts as resistance.

Answer: Role reversal: the former support at ₹250 has become resistance.

Exam tips

Questions often test the direction of the trendline: lows for uptrend, highs for downtrend.
Expect a definition-style MCQ on role reversal; know both directions.
Watch for absolute words such as 'always' or 'exact'; they usually mark wrong options.
Remember that a third touch confirms a trendline and that more touches add significance.
With negative marking of 25% of the question's marks, skip only if you cannot remove two options.

Practice questions from Technical Analysis

Trends, Support and Resistance: frequently asked questions

How do you draw a trendline?

In an uptrend, join two or more rising swing lows and extend the line forward. In a downtrend, join two or more falling swing highs. A third touch confirms the line.

What is role reversal in support and resistance?

When a support level is broken decisively, it often turns into resistance. When resistance is broken decisively, it often turns into support.

What is a trend channel?

A channel is made of a trendline and a parallel line drawn through the opposite swing points. Price moves between the two lines.

Are support and resistance exact prices?

No. They are best treated as zones where buying or selling interest has appeared before. Prices may slightly cross them without a real break.