A diagram to understand trading essentials: support lines and resistance lines:

Resistance level: The price level where selling pressure encounters resistance during an upward move, making it difficult for the price to continue rising Support level: The price level where buying interest appears during a downward move, halting the decline and stabilizing the price

Four Main Formation Factors
1. Moving Average System
Uptrend: Moving averages (MA5, MA10, MA20) act as support
Downtrend: Moving averages act as resistance
Practical: When the price retraces to key moving averages, rebounds or faces resistance often occur

2. Historical Highs and Lows
Previous highs: Dense trading zones, forming resistance levels
Previous lows: Psychological key levels, forming support levels
Multiple tests: Unbroken levels have stronger significance

3. Gaps
Upward gap: When the day's low is higher than the previous day's high
Downward gap: When the day's high is lower than the previous day's low
Function: Gaps create a price vacuum zone, providing resistance or support

4. Trend Channels
Upward channel: Upper boundary as resistance, lower boundary as support
Downward channel: Upper boundary as resistance, lower boundary as support
Application: Channel boundaries are suitable for high sell and low buy operations
Practical Judgment Tips
Strong Support Level Characteristics
Multiple tests without breaking
Accompanied by large buy orders
Important moving averages or round number levels
Strong Resistance Level Characteristics
Multiple attempts without breakthrough
Accompanied by large sell orders
Previous important high points

Conversion Principles
Key Rule: Resistance and support levels can switch roles
Support to Resistance: After breaking support, the former support level becomes resistance
Resistance to Support: After breaking resistance, the former resistance level becomes support

Confirmation Standards:
Effective breakouts require volume confirmation
Closing price must stay above/below the breakout level
Retests that do not break confirm the breakout
Practical Strategies
Buying Strategies
Buy at support: Enter in batches when the price approaches key support levels
Breakout retest: Add positions after a breakout and retest confirms the move
Moving average support: Buy on retracements to moving averages during bullish alignment

Selling Strategies
Reduce positions at resistance: Exit in batches when approaching key resistance levels
Stop-loss on breakdown: Exit promptly if support is broken
Moving average resistance: Sell on rebounds to moving averages during bearish alignment
Core Points
Judgment Techniques
Multiple confirmations: Use various methods simultaneously
Volume cooperation: Key levels require volume support
Timeframes: Longer cycles make support and resistance more significant

Risk Control
Strictly follow stop-loss rules
Avoid chasing highs at resistance levels
Exit immediately if support is lost
Manage position sizes reasonably
Precautions
Dynamic adjustments: Support and resistance levels change with market conditions
Relative concepts: Importance varies across different timeframes
Psychological factors: Market sentiment affects level effectiveness
Comprehensive analysis: Use in conjunction with other technical indicators
Practical Insights
Support and resistance levels are fundamental tools in technical analysis but are not foolproof. Success depends on:
Probability thinking: Develop strategies based on high-probability events
Capital management: Strictly control risk per trade
Patience: Wait for the best risk-reward opportunities
Continuous learning: Constantly improve your trading system

Remember: Technical analysis is an auxiliary tool; rational investing and risk management always come first. In practice, better to miss an opportunity than to take unnecessary risks.