📊 Charts & Technical Analysis · Lesson 3 of 9 · 9 min
Support & Resistance
🏀 Price has a floor it keeps bouncing off and a ceiling it keeps banging its head on. Find those two lines and you've found where the entire crowd is secretly making its decisions.
💡 Key idea
Support = floor (buyers defend). Resistance = ceiling (sellers defend). Broken resistance often flips into new support.
🧠 Why it matters
SUPPORT is a price 'floor' where buyers keep stepping in and pushing price back up. RESISTANCE is a 'ceiling' where sellers keep knocking it back down. These levels exist because traders remember them — they're psychological. The kicker: when price finally BREAKS through resistance, that old ceiling often becomes the new floor (support), and vice versa.
🌍 In the real world
💡 A stock bounces off $50 three times — that's support; buyers trust it. If it finally crashes below $50, watch: $50 often flips into resistance, as everyone who bought there tries to sell at break-even on the way back up.
📌 Takeaways
- Support = price floor where buyers step in
- Resistance = ceiling where sellers step in
- Broken levels flip roles (resistance → support)
📖 Terms in this lesson
Support and resistance: Price levels where a stock has repeatedly stopped falling (support) or stopped rising (resistance).
✅ Test yourself
SUPPORT on a chart is...
- A price ceiling
- A floor where buyers tend to step in
- The average price
- A type of candle
Answer: B · A floor where buyers tend to step in
Support is the floor where buying pressure repeatedly halts a decline.
When price breaks ABOVE resistance, that level often...
- Disappears forever
- Becomes new support (a floor)
- Becomes illegal
- Doubles the price
Answer: B · Becomes new support (a floor)
Old resistance frequently flips into new support once price breaks through it.
Why do support and resistance even work?
- The government sets them
- Traders remember them — they're psychological
- They're random
- Banks enforce them
Answer: B · Traders remember them — they're psychological
They hold because enough traders act at those remembered prices — crowd psychology.
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