Support / Resistance
A price level where price tends not to fall below is support, one it tends not to rise above is resistance — zones formed by many people's memory and orders converging.
In plain terms
Throw a ball at the floor and it bounces. Price too has a zone where, on falling to a certain level, it keeps bouncing back up — that "floor" price level is called support.
Conversely, a "ceiling"-like level where price keeps getting blocked and turns down on the way up is called resistance. Think of them as the points where people crowd in saying "I will buy at this price" or "I will sell at this price."
What it tells you
The real reason support and resistance actually work is not that the price itself has any power, but that many people watch the same line and act similarly at that price. In other words, the line on the chart does not move the market — people's memory and orders make the line.
So support and resistance let you gauge "where attention will gather next." Breaking above resistance (a breakout) or below support (a breakdown) is often read as a trigger for the prior consensus to change.
Formula
no set formula. A price level where price has bounced several times is support; one where it has been blocked several times is resistance.
What high or low means
When price often bounces near support, it means many see that level as a floor. Conversely, getting blocked often at resistance means many find that price burdensome.
A strong break above resistance can turn that line into support this time (a role reversal). But a single break does not always make it so.
There is a counterintuitive point. Support and resistance so famous that everyone knows them often do not work cleanly. Because many place stop-losses or limit orders at that price, large investors often deliberately nudge price just past the line to trigger those orders and then reverse it — a frequent "fakeout."
Support and resistance are not exact ruler-drawn lines but "rough zones." Each person draws them differently, so they are not objective.
When big news breaks or a strong trend persists, past levels are easily ignored. Support and resistance are closer to inertia that works when no big event occurs, not a solid wall blocking price. They also look only at price action, unrelated to company value, and are not in themselves a buy/sell signal.
Round numbers with no special basis — like Dow 10,000 or a neat bitcoin price — often act as strong support/resistance, because many people's eyes and orders crowd onto that number.
This shows well that support and resistance are not magic hidden in the price but something like a "promise" the market makes by itself when attention converges on one spot.
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see Support and other financial metrics alongside the sector average.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.