Support & Resistance
Price levels where buying or selling pressure has repeatedly shown up before — the foundation underneath most other chart patterns.
Support is a price level where a security has historically stopped falling, as buyers repeatedly stepped in; resistance is the mirror — a level where it's repeatedly stopped rising, as sellers repeatedly showed up. Neither is a precise line so much as a general zone; several past touches nearby is what makes a level worth watching.
This concept underlies most of the specific patterns elsewhere on this track: a Head & Shoulders' neckline, a Double Top's rejection level, a flag's own short-term boundary — all of these are just support or resistance with a specific shape of price action around them.
Illustrative shape — price testing the same support level three times before breaking through
Key takeaways
- A broken support level often "flips" to become resistance on the way back up (and vice versa) — old floors becoming new ceilings is a commonly observed behavior.
- The more times a level has been tested and held, the more significance traders typically assign to it — though nothing is ever guaranteed to hold.
- Round numbers (e.g. a $100 share price) often act as informal support/resistance simply because many market participants place orders around them.