Support and Resistance
beginnerFundamental•1 min read
Quick Answer
Price levels where buying or selling pressure is expected to be strong enough to prevent further movement.
What is Support?
Support is a price level where a downtrend is expected to pause due to a concentration of buying interest. As the price drops toward support, buyers become more inclined to buy and sellers become less inclined to sell.
Pro Tip
Think of support as a 'floor' that prevents prices from falling further. The more times a support level is tested and holds, the stronger it's considered to be.
What is Resistance?
Resistance is the opposite of support - a price level where an uptrend is expected to pause due to a concentration of selling interest. As the price rises toward resistance, sellers become more inclined to sell and buyers become less willing to buy.
Note
Think of resistance as a 'ceiling' that prevents prices from rising further. Like support, resistance levels become stronger the more times they're tested.
How to Identify Levels
- Historical price points - Look for areas where price has reversed multiple times
- Round numbers - Psychological levels like $100, $50, etc.
- Moving averages - Often act as dynamic support/resistance
- Fibonacci retracements - Key percentage levels often coincide with S/R
- Volume profile - High volume areas often become important levels
Real-World Example
Bitcoin repeatedly found support around $30,000 in 2021, bouncing off this level multiple times before eventually breaking down in 2022.