SUPPORT &

RESISTANCE
 Introduction
Investors and traders have banked on support and resistance long
before they could point them on a rectangular screen. Until the
wave of technology hit the markets, floor traders mathematically
calculated these levels using highs, lows and closes of assets in the
prior periods. The strength and precision of these indicators led to
their entry into the online trading platform.
 What Are Support And Resistance?
‘Support’ and ‘resistance’ are arguably two of the most commonly
used terms in the domain of the stock market. They lay the very
foundation of technical analysis. From novice traders to seasoned
ones, it is used as a key determinant of potential trades. Various
technical indicators such as the Fibonacci retracement, Wolfe
waves, Pivot points, etc. are built to help you identify potential
support and resistance levels.
 Support
These are the price levels at which
the stock price in a downward
trend experiences a surplus of
buyers over sellers. To put it in
simpler words, support is a price
point at which the demand
exceeds the supply. This increased
participation by buyers tends to
prevent the price from falling any
further.
 Resistance
This is the exact opposite of the support levels. These are the price
points where the supply exceeds the demand. The responsive traders
wait for the price to come to a perceived level of overvaluation and
participate to push prices back to a level of fair valuation.
 The Principle Of Polarity
Have you ever noticed a support level serving as a resistance level once
it's breached or a resistance behaving like support? This is what the
Principle of Polarity states. This happens due to, again, demand and
supply. These price action points leave an impression on the trader's
mind and traders remember these points in hindsight the next time they
trade.
How Gaps Act As Support And Resistance?
Gaps are one of the key indicators of support and resistance. When
there is a gap in the market, buyers and sellers tend to ‘fill the gap’.
Once gaps are filled, the price action either reverses or the trend
continues. A price rally can cause a gap-up on the charts. As traders try
to fill the gap, the lower end can act as the support level. The price can
either break this level and fall further from the gap or move upwards.
Conversely, if there is a gap-down, the upper end of the gap can act as
the resistance level.
 Psychological Levels 🤝 Support And
Resistance
Psychological levels are ‘easy to remember’—they are mainly round
numbers like 1000, 2000, 10000, etc. Psychological levels are
represented by invisible lines at high volumes as traders try to push
the stock or indices on either side. These levels act as Resistance or
Support as the price of asset might pause or reverse from this level.
Bank Nifty Reversing From 44500 Level (Psychological
Level)

Ban
 Wicks As Support & Resistance
Candlestick wicks are a sign prices are being rejected by the
buyers/sellers. It signifies the unsuccessful attempts to move a
price towards a certain direction. Traders look out for wicks to seek
insight into potential trend reversals and to set support and
resistance levels since wicks represent price rejections.
Wicks At Support
Wicks At Resistance
Examples Of Candlestick Patterns
At Support & Resistance