Support and Resistance Lines

The support level is a lower line which the stock price rarely breaks. A technican will expect a substantial increase in the demand for a stock when the price reach this level.

A resistance line is a upper level where the technican will expect a large drop in the demand for the stock and a price reversal.

Support and resitance levels can be both horisontal or show a rising trend.


In the figure the support level becomes the new resistance level of the stock price as time pass:





Source: http://www.investopedia.com/university/technical/techanalysis4.asp