what is resistance and support in trading

Support and resistance are two foundational concepts in trading, particularly in technical analysis. Support is the level at which demand is strong enough to stop the stock from falling any further, while resistance is the level at which supply is strong enough to stop the stock from moving higher. Support and resistance levels can be found in all charting time periods, from daily to monthly, and can be identified by looking back at the chart to find a significant pause in a price decline or rise. Once identified, traders can use support and resistance levels to manage risk, place stops, determine market conditions, and find appropriate entry and exit positions. When a support or resistance level is broken, its role is reversed, and it becomes the opposite. For example, if the price falls below a support level, that level becomes resistance, and if the price breaks up through resistance, that level becomes support. Understanding these concepts and their practical application is essential to correctly reading price charts and making informed trading decisions.