Support is the price level at which a falling price tends to slow or even reverse. This means that the price is more likely to jump above this level than to break it. However, once the price has passed this level, it is likely to continue to fall until you find another level of support.
Resistance is the price level at which the bullish price tends to slow or even reverse. The price is more likely to jump down from this level than to break it. However, a break above this level opens the way for further price growth until it meets another level of resistance.
Support and resistance are often created by:
- Previous ups and downs
- Trend lines
- Moving Averages <—- we will eventually use these to coincide with the levels of the others listed here.
- Fibonacci levels, etc.