Support and resistance

Support and resistance are among the first ideas most traders learn to read on a price chart. They describe areas where price has repeatedly slowed, paused, or turned in the past, and where a fresh reaction may draw attention again. Learning to see them is less about predicting the future and more about understanding where earlier buying and selling left their mark.

What support and resistance are

Support is a price area where buying has tended to halt declines, acting like a floor. Resistance is a price area where selling has tended to cap advances, acting like a ceiling. Both are read from what price has done before, not from any fixed rule about where it must go next.

• Support a lower area where falling prices have previously met enough buying to slow or reverse the decline.
• Resistance an upper area where rising prices have previously met enough selling to slow or reverse the advance.

How these areas form

These areas grow out of prior price behaviour. When a market falls to a certain region and buyers step in more than once, that region starts to stand out as support. The same thing happens in reverse when sellers repeatedly appear around a higher region, which marks it as resistance.

When the roles switch

Support and resistance are not fixed forever. If price moves through a resistance area and then holds above it, that former ceiling can begin to act as support, an idea often called role reversal. Many traders simply mark these areas and watch how price behaves as it approaches them, rather than treating them as forecasts. What happens next is never certain, so the areas are used as context, not as instructions.