Support and Resistance Levels#
Support and resistance are the most fundamental concepts in technical analysis.
What is Support?#
A price level where buying interest is strong enough to prevent further decline.
- Price tends to bounce up from support
- Think of it as a floor
What is Resistance?#
A price level where selling pressure is strong enough to prevent further rise.
- Price tends to pull back from resistance
- Think of it as a ceiling
How to Identify S/R Levels#
1. Previous Highs and Lows#
- A previous high becomes resistance
- A previous low becomes support
- The more times tested, the stronger the level
2. Round Numbers (Psychological Levels)#
- ₹100, ₹500, ₹1000, ₹10000
- Nifty: 20000, 22000, 25000
- Traders place orders at round numbers
3. Moving Averages as Dynamic S/R#
- 20 EMA: Short-term dynamic support/resistance
- 50 SMA: Medium-term
- 200 SMA: Long-term (institutional attention)
4. Pivot Points#
Calculated from previous day's High, Low, Close:
Pivot = (High + Low + Close) / 3 R1 = (2 x Pivot) - Low S1 = (2 x Pivot) - High
The Polarity Principle#
Once broken, support becomes resistance and vice versa.
This is one of the most important concepts in trading:
- Stock breaks above resistance at ₹500
- ₹500 now becomes support for pullbacks
- If it falls back below ₹500, it becomes resistance again
Practical Tips#
- S/R are zones, not exact lines (use a range)
- More touches = stronger level
- Higher timeframe S/R > lower timeframe
- Volume spike at S/R confirms the level
- Always check multiple timeframes