Support and resistance.
In plain English
Support and resistance are price levels chart-watchers use to describe where a stock has repeatedly reversed. Support is a floor where buyers have stepped in and halted declines; resistance is a ceiling where sellers have capped rallies. Traders watch these levels for possible bounce or breakout points, and a broken resistance can become new support. The idea is partly self-fulfilling, since many traders place orders around the same visible levels. But levels break regularly, and there is no rule that a past floor or ceiling will hold, so they are rough guides, not guarantees.
01Why it matters
Support and resistance are among the most-referenced chart concepts, so understanding they are rough, often self-fulfilling guides, not rules, keeps you from over-trusting a level.
02The math, step by step
A stock bounces off 30 dollars three times, so traders call 30 support. When it finally falls below 30 on heavy volume, that old support can flip into resistance, a level it then struggles to climb back above.
03What this is NOT
Support and resistance are NOT hard barriers. They are levels where a price has reversed before, but they break regularly, so they describe tendencies, not rules a price must obey.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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