Support and Resistance

Support is a price level where a falling stock tends to pause or reverse because buyers step in at that level — they see value and absorb selling pressure. Resistance is the opposite: a price level where a rising stock tends to stall because sellers emerge, taking profits or initiating short positions. These levels are 'remembered' by the market because significant transactions occurred there.

When a resistance level is decisively broken to the upside, it often becomes a new support level. When a support level is broken to the downside, it often becomes new resistance. These 'role reversals' are among the most reliable patterns in technical analysis.

Example: The S&P 500's 200-day moving average often acts as support in bull markets. When the market fell toward this level in 2022, it temporarily bounced multiple times before ultimately breaking through — confirming the bear market. Traders who watched this level had advance warning of a potential deeper decline.

BMInsider's market analysis charts overlay key support and resistance levels, helping subscribers identify high-probability entry and exit points for trades.