Support and Resistance: does it work?
Buying near support and selling near resistance is the first idea most chart-reading courses teach. Two mechanical versions were coded and tested: a hammer or shooting-star candle at a level, and a bounce off the daily pivot point.
The rule we tested. Two rules: a hammer or shooting-star candle forming at the edge of its 50-day range on daily crypto bars, and a bounce off the classic daily pivot-point support and resistance levels on hourly crypto bars, held for at most five bars.
- Hammer / shooting star at support-resistance (18 crypto pairs (BTCUSDT, BNBUSDT, XRPUSDT, ADAUSDT, …)), 2017-08-18 to 2025-03-14, costs 0.10%–0.17% per side: −63.3 pts/yr vs the benchmark across 117 completed trades, unadjusted p=1.000, BH-adjusted q=1.000: did not beat the benchmark.
- Classic daily pivot point support/resistance bounce (8 crypto pairs (BTCUSDT, BNBUSDT, XRPUSDT, ADAUSDT, …)), 2017-08-17 to 2025-03-14, costs 0.10%–0.12% per side: −160.1 pts/yr vs the benchmark across 27,041 completed trades, unadjusted p=1.000, BH-adjusted q=1.000: did not beat the benchmark.
These versions did not pass these tests. crypto pairs −63.3 pts/yr vs the benchmark (unadjusted p=1.000, BH-adjusted q=1.000); crypto pairs −160.1 pts/yr vs the benchmark (unadjusted p=1.000, BH-adjusted q=1.000). None cleared Tickfloor's Benjamini-Hochberg q<0.10 bar once weighed against every other rule tested alongside it. This describes the tested implementations, the costs and the benchmark stated here, not every version of the rule. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
This is one line in a wider check: Tickfloor's research desk has run 517 strategies, most of them against an equal-weight benchmark of the same assets rebalanced daily that pays no costs (the strategies pay theirs), and after correcting for how many were tested (Benjamini-Hochberg, 598 tests), 0 passed. That does not prove no strategy works, and it says nothing about untested versions of a rule. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.
Does support and resistance trading work?
These versions did not pass these tests. crypto pairs −63.3 pts/yr vs the benchmark (unadjusted p=1.000, BH-adjusted q=1.000); crypto pairs −160.1 pts/yr vs the benchmark (unadjusted p=1.000, BH-adjusted q=1.000). None cleared Tickfloor's Benjamini-Hochberg q<0.10 bar once weighed against every other rule tested alongside it. This describes the tested implementations, the costs and the benchmark stated here, not every version of the rule. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
What exact rule did Tickfloor test?
Two rules: a hammer or shooting-star candle forming at the edge of its 50-day range on daily crypto bars, and a bounce off the classic daily pivot-point support and resistance levels on hourly crypto bars, held for at most five bars.
Is this financial advice?
No. This measures a publicly claimed strategy rule, not a recommendation. General information only, not personal advice.
See the full numbers on the Other tested patterns, Mean reversion family pages, or the full method and every result.