Support and resistance are two of the most fundamental concepts in technical analysis. They help traders identify potential entry and exit points.
What Is Support?
Support is a price level where a stock tends to stop falling. It acts like a floor — buyers step in at this level, preventing the price from going lower.
What Is Resistance?
Resistance is a price level where a stock tends to stop rising. It acts like a ceiling — sellers step in at this level, preventing the price from going higher.
How to Identify Them
- Look at historical price charts for levels where the stock has bounced multiple times
- Round numbers (₹100, ₹150, ₹200) often act as psychological support/resistance
- Previous highs and lows are natural levels
- Moving averages can act as dynamic support/resistance
Role Reversal
When a stock breaks through resistance, that resistance level often becomes the new support. Similarly, when support breaks, it often becomes new resistance.
How Traders Use Support and Resistance
- Buy near support levels
- Sell near resistance levels
- Set stop losses just below support
- Watch for breakouts above resistance
Disclaimer: This article is for educational purposes only.
