Support and resistance

Here's a look at the basics of support and resistance levels.

  • By Stuart Evens,
  • Stocks and Commodities Magazine
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One premise of technical analysis is that stock prices are affected by support and resistance. As those terms imply, support acts to keep a stock's price above a certain level, while resistance acts to keep a stock's price below a certain level. In fact, once it has been determined that a price has acted as important support or resistance in the past, it is very likely that a particular price will do so again in the future. Drawing support and resistance lines on stock charts helps determine how significant they were in the past and how significant they might be again.

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