Level 3Support and resistance
What are support and resistance?
Support is an area where falling price has stopped and bounced upward again and again; resistance is where rising price has repeatedly stalled. Both are two faces of the same phenomenon: around that price, one side's pressure outweighs the other's. On the chart they appear as the marks of price hitting the same level and turning back. It helps to know where to look: these areas form most often at prices that produced a clear high or low in the past, and at round numbers such as 100 or 1,000 — the place everyone can see tends to become the place everyone reacts to.
Why do they form? Because market participants remember price levels. When price returns to a level that produced a reaction before, similar decisions can kick in again. Support and resistance are products of market memory, not of the chart itself.
So what do these levels NOT say? That price is bound to stop there. Support is not a rule that says "price stops here"; it is an observation that price has stopped here before. That difference is the essence of this whole course: observations produce probabilities, rules promise certainty — and markets offer no certainty.
This content is educational information, not personalised investment advice. The chart examples are illustrative.
A short note
That is exactly the record's distinction: "stops" is the language of rules, "has stopped" the language of observation. The strongest conclusion an observation supports is a probability — if price returns to the area, a reaction is watched for, not announced. "It says nothing" swings to the opposite extreme: past reactions are precisely what make the area worth watching today. How these areas are found is station 3's subject.