Role reversal

A price level that once stopped a decline does not simply disappear once it is broken. It often flips to the opposite role instead.

Once support gives way, the same level tends to turn into resistance on the way back up. Once resistance is broken, that level tends to turn into support on any pullback.

The workbook: "Role Reversal: Support becomes resistance and vice versa. Once a support level is broken, it often becomes a new resistance level, and vice versa." Chapter 15.7.2 gives 3 reasons: traders who were trapped on the wrong side exit at breakeven near the old level, market sentiment shifts, and institutional orders reposition around it — all of which cluster new orders right at the level that just flipped roles.

Using the workbook's own support-and-resistance example: "an XYZ Stock resisting around Rs 1,950 levels." Once the stock finally breaks decisively above Rs 1,950 on strong volume, role reversal predicts that Rs 1,950 should now act as support on any pullback — traders who missed the breakout, and those who sold near Rs 1,950 expecting it to hold, tend to buy back near that same level, reinforcing it as a floor rather than a ceiling.

Chapter 15.7.2 (Types of Support and Resistance) introduces role reversal directly after the workbook's table of support-and-resistance types. Expect a scenario giving a broken level and asking what role it should play afterward.

• Role reversal is a tendency, not a guarantee. The workbook frames it as driven by trader psychology and order clustering — a role-reversal level can still be broken again, especially if the original breakout turns out to be a false one.