What is support and resistance on a chart
The support and resistance (S&R) levels on a price chart are areas where there is more buyers demand than sellers (support) and the resistance levels are where there is more sellers demand than buyers. So the support price is a price at which one can expect more buyers than sellers. Likewise, the resistance price is a price at which one can expect more sellers than buyers.
No doubt, the most highly discussed attributes of technical analysis. Why? Resistance levels act as barriers where it prevents the price of an asset from getting pushed up and likely the support level preventing price from dropping further.
> TRADERS use support and resistance levels to find points or levels on a chart where the probabilities favor a pause or reversal of a prevailing trend.
> Support levels occurs where a downtrend is expected to pause due to a concentration of demand.
> Resistance levels occurs where an uptrend is expected to pause temporarily, due to a concentration of supply.
> Market psychology plays a major role as traders and investors observe the past and react to changing conditions to anticipate future market movement.
> Support and resistance areas can be identified on charts using a few methods, candle sticks, previous levels, Fibonacci, trendlines and moving averages.