Support and Resistance

Levels where price keeps stopping

Support is where buyers cluster as price falls; resistance is where sellers cluster as price rises. The more often a level is tested, the more it matters.

Role reversal

Broken support often turns into resistance; once resistance is decisively broken, it often becomes support when price comes back to it.

It's a zone, not a thin line

Price often pokes through support intraday and then recovers. To judge a "real break," check whether the close is outside the zone and volume picks up, not whether price touched it for a moment.

Key takeaways

• Support: a zone where buyers gather on the way down and the price tends to stop falling. Resistance: a zone where sellers gather on the way up.
• The more times a level is tested, the more people watch it and the more important it becomes.
• Support and resistance are zones, not exact lines. To judge a real break, look at the close and volume rather than a brief intraday touch.
• Broken support often becomes resistance (role reversal), and broken resistance often becomes support.

Try it yourself

You can do these exercises in this lesson's interactive simulation:

1. Press and drag on the chart to put a horizontal line near $50: how many times is it tested? Price fell here three times and bounced each time. Is it support or resistance?
2. Click "Auto-detect" and compare with the lines you drew yourself; then drag the "Tolerance band" and watch how the test count changes.
3. Click "Play what's next": after $50 breaks, what happens when price bounces back near $50?
4. Switch to "Resistance $80 broken" and draw again: after $80 breaks and price falls back near $80, what has it become?

Quiz and explanations

1. The price has fallen to around $50 three times and bounced each time. $50 is…

Answer: Support.A level where the price repeatedly stops falling is support.

2. After resistance at $80 is decisively broken, when the price pulls back to around $80, it often becomes…

Answer: Support.That's role reversal between support and resistance.

3. Support is at $50. Today the intraday low hit $49.6, but the close was back at $50.4. What's the more sensible reading?

Answer: It only pierced support intraday; support may still hold, so keep watching.Support is a zone, and a wick poking through and then recovering is common. A close beyond the level looks much more like a real break.

Terms in this lesson

• resistance (Resistance): A price level or zone where rising prices tend to stall because sellers cluster there.
• support (Support): A price level or zone where falling prices tend to stop because buyers cluster there.