What is support and resistance?

Support and Resistance are technical terms used to identify prices at which a security might be likely to attract additional buyers or sellers. Learn how investors can use the concept of support and resistance to help decide what price it might be advantageous to buy or sell a security.

What are major support and resistance areas?

Major support and resistance areas are price levels that have recently caused a trend reversal. If the price was trending higher and then reversed into a downtrend, the price where the reversal took place is a strong resistance level. Where a downtrend ends and an uptrend begins is a strong support level.

What is the difference between support price and resistance price?

The support price can be define as the price that is assumed to attract more buyers to buy the stock rather than sellers. While a resistance price is the price that is assume to attract more sellers to sell the stock rather than buyers.

How do you identify support and resistance levels?

Another way to identify support and resistance levels is by tracking whole number levels such as 10, 20, 30, 40, 50, 100, or 1000. This strategy is based on market psychology – as a large proportion of traders tend to set their stop levels and profit targets around whole numbers, these price points have more people entering the market.