Support and Resistance: The Foundation of Chart Reading

Support and resistance are price levels where a chart has repeatedly stalled, reversed, or struggled to move past — arguably the most widely used concept in technical analysis.

Support

Support is a price level where buying pressure has historically been strong enough to stop a decline and push price back up. It acts like a “floor” that price tends to bounce off of.

Resistance

Resistance is a price level where selling pressure has historically been strong enough to stop a rally and push price back down. It acts like a “ceiling” that price tends to struggle to break through.

Why these levels form

Support and resistance often form at prices where a lot of trading activity previously took place — round numbers, past highs or lows, or levels where many traders have pending orders. These are simply areas where supply and demand have historically been in balance.

Role reversal

A broken resistance level often becomes a new support level once price is trading above it, and vice versa when support breaks. This “role reversal” is one of the more reliable patterns traders watch for.

Key takeaway

Support and resistance give traders reference points for planning entries, stop losses, and take profits — they’re not exact lines but zones where price is more likely to react, based on where it has reacted before.