What are Support and Resistance Levels?

Support is a price area where a falling stock has repeatedly stopped falling and bounced; resistance is where a rising price has repeatedly stalled. Both mark levels where buyers or sellers showed up in force before, and might again.

These levels exist because markets have memory. Buyers who missed the last dip leave orders where it bottomed, holders who bought a peak wait at their break-even price to sell, and stop orders cluster around round numbers. There's also a self-fulfilling layer: when enough traders watch the same level, their collective reaction helps create the bounce they expected. In use, a level that holds again can be traded as a floor or ceiling, while a level that breaks — especially on heavy volume — is treated as real news about supply and demand shifting. The classic follow-on is role reversal: broken resistance often becomes new support, because the people who sold there now regret it and buy the retest. Three practical notes: these are zones rather than exact lines, a level tested five times carries more weight than one tested once, and false breaks are common.

Resale tickets for a popular band: under $80 they vanish within minutes, which is support — real buyers waiting — while above $120 listings sit unsold for weeks, because sellers outnumber takers. Nothing magic lives in those numbers; they're where actual people repeatedly drew their lines. The weekend a $130 ticket sells instantly, everyone recalibrates, and the old ceiling starts acting as the new floor.