Support and Resistance

Support and resistance are key concepts in technical analysis that refer to price levels at which the price of an asset tends to stop and reverse.

• Support: A price level where a downtrend can be expected to pause due to a concentration of demand. As the price of an asset drops, demand for the shares increases, thus forming the support line.
• Resistance: A price level where an uptrend can be expected to pause temporarily, due to a concentration of supply. As the price of an asset rises, supply increases, thus forming the resistance line.

When a support or resistance level is broken, it often signals a continuation of the trend in that direction.