Support, Resistance & Supply/Demand
Understand the levels where price reacts and how SMC reframes them as liquidity and order blocks.
Support and resistance
Support is a price area where buying interest tends to emerge, halting or reversing declines. Resistance is where selling interest emerges, capping rallies. These levels form because price has reacted there before, leaving resting orders behind.
In SMC, we reframe support as sell-side liquidity below it and resistance as buy-side liquidity above it. The level itself is just a marker; the orders around it are what matter.
Supply and demand zones
Supply and demand zones are areas where institutional orders originated — closely related to order blocks. A demand zone is where buyers stepped in aggressively; a supply zone is where sellers did. Price tends to react at these zones on return.
SMC's order block is essentially a precise, rules-based version of a supply/demand zone, anchored to the last opposing candle before a structural break.
The unified view
Support/resistance, supply/demand, and order blocks are not competing systems — they are different lenses on the same reality: clusters of resting orders at meaningful prices. SMC gives you the most precise lens, but understanding the others makes you flexible and helps you read other traders' behavior.
Support that was really a trap
USDJPY has bounced from 149.00 three times. Every retail trader now 'knows' 149.00 is strong support and buys it with stops at 148.80.
- 1Reframe the level: those clustered buy stops below 149.00 are sell-side liquidity — a target, not protection.
- 2Price approaches 149.00 a fourth time. Instead of buying the level, ask where the stops are: below it.
- 3Price slices to 148.70 — sweeping every stop under the 'strong support' — then rallies 150 pips.
- 4The SMC trader read 149.00 not as support to buy, but as the lid over a liquidity pool to be swept first.
The more times a level holds, the more stops pile up beneath it — and the more attractive it becomes to sweep.
Mark this lesson complete
Sign in to track your progress.