Short trading tutorial explaining a resistance-turned-support setup: after price breaks resistance and retests, traders wait for buyers to demonstrate control (support formation) — if price falls back below, sellers regained control. A specific candle example is used to illustrate intrabar buyer/seller battle and how buyers can hold price above the key level.
Let's say we have resistance up here. We break out, we retest. In this scenario here, we know this is first resistance, now turn into support. Now in this area, we have to wait for some level of support to form or buyers to basically tell us that they are stepping in and overpowering sellers. Because we know if it breaks back below, that means sellers overpowered buyers. If we use this example right here, this is where we have to understand price action just a little bit. For this candle, for example, what does this show us? This shows me that the stock or the candle opened up here, we brought it down. It means that at this level, sellers were overpowering buyers. And then when we bring it back up from the lows, what does that show? That even though sellers were stronger than buyers at one point of this candle, buyers were still able to hold it above the key level, which is the resistance. Now turn into support. And we can clearly see that there was a fight between sellers and buyers, and buyers won.
