Support and resistance are two of the first concepts anyone reads about when they start looking into gold or any other traded market. They’re simple ideas, but they underpin a huge amount of price-action analysis — including the daily framework we use at SteelTrades Engine.
What support and resistance actually are
Support is a price area where buying pressure has historically been strong enough to stop price falling further, at least temporarily. Resistance is the mirror image — a price area where selling pressure has tended to stop price rising further.
Neither is an exact line. They’re better thought of as zones, since price rarely reacts at the exact same tick every time — it tends to react somewhere in the vicinity of a level that’s mattered before.
Why these levels tend to matter
The simplest explanation is memory and positioning. If a lot of trading activity happened around a particular price previously — a swing high, a swing low, a previous day’s close — there’s a reasonable chance that price level is still relevant to other market participants. Orders left over from before, and traders watching the same obvious levels everyone else is watching, can create genuine reactions when price returns to that area.
This is part of why previous highs and lows — like yesterday’s high/low, or last week’s high/low — are used so often in gold analysis. They’re not arbitrary; they’re prices the market has already shown it cares about.
Reading candlestick closes at these levels
One detail that matters more than people expect: how a candle closes relative to a level, not just whether price briefly touches it. Price often “wicks” through a support or resistance zone and then closes back on the other side — which is generally read very differently to a clean close beyond the level. A close is a moment where buyers and sellers have, at least temporarily, settled a disagreement; a brief wick through a level is often just noise.
This is why level-based frameworks tend to talk about the close above or below a level, rather than treating any touch of that price as equally meaningful.
How this fits into a daily framework
At SteelTrades Engine, this is exactly the kind of thinking behind the levels in every daily brief — the Daily Open, previous day high/low, and previous week high/low are all, at their core, support and resistance concepts applied consistently, every single day. If you’re new to this and want to see it laid out in practice, our How It Works page walks through what’s in each brief, and our FAQ covers common questions about the service itself.
This article is for general educational purposes only and does not constitute financial advice. SteelTrades Engine is not authorised or regulated by the Financial Conduct Authority. Nothing in this article is a recommendation to buy, sell, or hold any position — always do your own research and seek independent financial advice before trading.
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