Support and resistance are price areas where movement has previously stalled or where traders anticipate buying or selling interest.
The idea
Support is an area where a decline has previously slowed or where buying interest is expected. Resistance is an area where a rise has previously slowed or where selling interest is expected. They are often better treated as zones than exact prices. A level can be tested repeatedly or broken, and past reactions do not guarantee a future response.
Apply the idea
Suppose a market previously slowed near $98 and later paused near $105. Mark those areas on a chart and observe how price behaves when it approaches them again. It could rebound, consolidate or move through either area. Consider the wider trend and upcoming events before drawing conclusions.
Key takeaway
Use support and resistance to organise observations, not as guaranteed floors or ceilings. Review the zone in the context of the timeframe and surrounding market.
