How support and resistance levels are found

Every chart on this site draws two support and two resistance lines. This explains exactly how they are found, and — more usefully — how much weight they deserve.

The method, step by step

1. Find swing points. A bar's high is a swing high if it is the highest of the five bars either side; likewise for lows. The absolute high and low of the window are always included.
2. Set a tolerance. Take the median candle range over the window, and use the larger of 0.8 times that or 0.3% of the current price. This scales to the instrument: an option at ₹300 and one at ₹20 need very different definitions of "the same level".
3. Cluster. Group swing points that fall within the tolerance of each other. Each cluster becomes one level, priced at the average of its members.
4. Rank and keep two per side. Sort by how many swings formed the cluster, then by how close it is to the current price. Near-duplicates are discarded.

Why the levels change when you change the window

Switch from the 1-hour view to the full day and the lines move. That is intentional, not a bug: a level that mattered over an hour is not the same as one that mattered all session. It is also the first reason to be careful with support and resistance generally — the answer depends on the question you asked, and it is easy to pick the window that shows what you already believed.

Levels on option premium are not levels on the index

This distinction matters more than anything else on this page. When you see support at ₹108 on the 24,000 CE, it means buyers repeatedly stepped in at that premium. It is not a statement about where the index will find support.

Worse, option premium decays. The same index level implies a lower premium with every passing hour, so a premium "holding support" can simply mean the index rose while time decay pulled the option down. On expiry day this effect is large.

What the touch count means

The ×3 on a level's label is how many swing points formed it. The usual claim is that more touches mean a stronger level. Treat that with some scepticism: more touches also means the level is older, and a level tested repeatedly is arguably one that is being worn down rather than defended. The count is shown so you can judge, not because it is proven to matter.

How much weight to give them

Swing-cluster levels are price memory. They work to the extent that other traders are looking at the same chart and acting on it, which is real but modest and unreliable.

A level with capital behind it is a different matter. When a price level coincides with a strike where put writers have built heavily, somebody stands to lose money if it breaks, and that is a stronger reason to expect a defence than the fact that price turned there twice last hour.