What are support and resistance levels?

Support and resistance levels can help traders gain extra insight into the strength of a price trend. Here we define support and resistance levels, explain how to identify and draw both lines, and more. What is support and resistance?

What is the difference between area of support and resistance?

Simply put, an area of support is where the price of an asset tends to stop falling, and an area of resistance is where the price tends to stop rising. But traders really need more information about support and resistance beyond those simple definitions before they attempt to make trading decisions based on those areas in a chart.

How do resistance and support levels affect a market?

They can be affected by a variety of factors. Not all support and resistance levels are equal. Minor levels will temporarily delay rising or falling prices within a larger trend, while major ones could stop and reverse a trend altogether. The more times a market bounces off a support or resistance level, the stronger it is seen as being.

What are support and resistance in stock market technical analysis?

In stock market technical analysis, support and resistance are certain predetermined levels of the price of a security at which it is thought that the price will tend to stop and reverse. These levels are denoted by multiple touches of price without a breakthrough of the level.