Support and Resistance Basics

The concepts of support and resistance are undoubtedly two of the most highly discussed attributes of technical analysis and they are often regarded as a subject that is complex by those who are just learning to trade.

These terms are used by traders to refer to price levels on charts that tend to act as barriers from preventing the price of an asset from getting pushed in a certain direction. 

Support and Resistance can come in various forms and it is much more difficult to master than it first appears.

Certain price levels tend to prevent traders from pushing the price of an underlying asset in a certain direction. In this case, traders would call the price level a level of resistance. Resistance levels are also regarded as a ceiling because these price levels prevent the market from moving prices upward. 

We have price levels that are known as support. This terminology refers to prices on a chart that tend to act as a floor by preventing the price of an asset from being pushed downward. The ability to identify a level of support can also coincide with a good buying opportunity because this is generally the area where market participants see good value and start to push prices higher again.