Price levels on a chart where a stock price tends to find buying support (floor) or selling pressure (ceiling).
Support and resistance are key horizontal price levels on a chart where the price of a stock tends to stop, reverse, or pause due to changes in buying and selling pressure.
Support is the 'floor' where buying interest is strong enough to overcome selling pressure, causing a falling price to pause and bounce back up. Resistance is the 'ceiling' where selling interest is strong enough to overcome buying pressure, causing a rising price to stop and turn downward. These levels are formed by previous price highs and lows.
These levels are the building blocks of chart analysis. They show where market participants have previously shown consensus on value. Knowing support and resistance levels helps traders identify high-probability entry points (buying near support), target exits (selling near resistance), and place logical stop-losses (just below support).
If Nifty consistently drops down to 21,500, stops falling, and bounces back up, 21,500 is considered a strong Support level. If Nifty rises to 22,200 but repeatedly faces selling pressure and turns down, 22,200 is a Resistance level. A breakout happens when the price strongly breaches the resistance level, which then often turns into new support.
Look at your chart and connect the major swing lows with a horizontal line to draw support. Connect the major swing highs with another horizontal line to draw resistance. Look for levels that have been tested multiple times.
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Download Free Android AppA trading discipline used to evaluate investments and identify trading opportunities by analyzing statistical trends from trading activity.
A method of evaluating a security to measure its intrinsic value by examining related economic, financial, and qualitative factors.
A type of financial chart used to describe price movements of a security, showing open, high, low, and close prices.