Glossary term

Support and Resistance

Also called: Support & Resistance, Support Resistance, S&R, SnR, S and R, support resistance levels, supply and demand zones.

Support and resistance are price zones on a chart. Buying or selling interest has clustered there before. Price may pause, slow or turn there. Support sits below the current price, where demand has tended to absorb selling. Resistance sits above it, where supply has tended to cap advances. On NSE cash and F&O charts, they are commonly drawn from earlier swing highs and lows. Round numbers, prior session highs and lows, and areas of heavy volume are also used.

Formula

Support and resistance are zones read from price history, not from a single equation. But floor-trader pivot levels are one standard way to derive candidate levels from the prior period's High, Low, and Close: Pivot (P) = (High + Low + Close) / 3. Resistance 1 (R1) = 2P − Low. Support 1 (S1) = 2P − High. Resistance 2 (R2) = P + (High − Low). Support 2 (S2) = P − (High − Low).

How it is read

Traders commonly read these zones as areas where earlier order flow clustered. Price reactions near them are watched for context. A level price has touched and turned away from several times is often described as more "tested". Many participants treat support and resistance as bands, not exact single prices. Real fills cluster in a range. When price moves decisively through a zone, that former resistance is often described as possibly acting as support afterwards. The reverse is described the same way. This is usually called a role reversal or flip.

What it does not tell you

Support and resistance describe where reactions have happened in the past. They do not tell you whether price will react there again. They do not tell you when, or how strongly. They make no prediction about future direction. The zones are subjective: two analysts can draw them differently from the same chart. On their own they say nothing about volume confirmation, news, expiry-day dynamics or liquidity. Price frequently overshoots a zone intraday before settling. A level holding once is not evidence it will hold again. Treating these zones as guarantees is a common misreading.

Breakout

Definition →Track

Levels, breaks, and breaks that fail

Open the track →

Reference. NSE India — Technical Analysis investor education material.

The lesson that uses this term