What are Support and Resistance?

Support and resistance are price levels where an asset tends to find buying (support) or selling (resistance) pressure strong enough to temporarily halt or reverse a price trend. These levels form due to market psychology and the concentration of orders.

Key Concepts

Support

• Price floor where buying pressure increases
• Previous low points
• Areas of demand
• Psychological levels
• High-volume nodes

Resistance

• Price ceiling where selling pressure increases
• Previous high points
• Areas of supply
• Round numbers
• Historical turning points

Trading Applications

Level Identification

• Historical price points
• Volume profile analysis
• Trend line intersection
• Moving averages
• Fibonacci levels

Trading Strategy

• Entry point selection
• Stop loss placement
• Target setting
• Breakout trading
• Range trading

Related Terms

• Price Action
• Market Structure
• Volume Profile
• Technical Analysis