Support is a level or zone where demand was enough to stop or reverse a decline. Resistance is where supply stopped or reversed a rally.
In plain terms — Support is a «floor» where price bounces up; resistance is a «ceiling» where price bounces down. They are zones where the market already reacted — not guarantees they will always hold.
| Term | Role |
|---|---|
| Support | Zone of potential buying / pause in decline |
| Resistance | Zone of potential selling / pause in rally |
| Breakout | Price closes beyond the zone with conviction |
| Retest | Return to broken level to test it as new support/resistance |
How levels form
- Prior highs/lows — market «remembers» prices where it turned
- Consolidations — areas with heavy trading-volume
- Round numbers — 100, 50, 10,000 index points (psychological barriers)
- Trend lines and channels — dynamic support/resistance along the trend
Example — A stock falls to €24 three times and bounces: €24 becomes support. It rises to €28 and is rejected twice: €28 is resistance. A breakout above €28 on high volume can open room toward the next level.
Limits
Levels do not always hold: news, thin liquidity, or gaps can slice through them. Round numbers (psychological barriers) influence behaviour but do not replace confirmation from structure and trading-volume.