When this stock reached a prior high (resistance), it fell. The market logic is fairly simple: buyers who purchase near a support level, only to see price fall, are likely to sell in order to recover their losses, when price rallies to near their break-even point. For technical support levels, see But what exactly is supply and demand? Support and resistance levels can be identified by The more often a support/resistance level is "tested" (touched and bounced off by price), the more significance is given to that specific level.If a price breaks past a support level, that support level often becomes a new resistance level. Here is an example:The highlighted area in green is where you would buy the stock.It works just the opposite for shorting stocks. Novice traders do just the opposite of this.This is a home study course that teaches you how to trade stocks from full-time swing trader Kevin Brown. For example, look for stocks that pull back and find support halfway into a prior wide range candle. The opposite is true as well; if price breaks a resistance level, it will often find support at that level in the future.Psychological Support and Resistance levels form an important part of a trader's technical analysis.This is an example of support switching roles with resistance, and vice versa: Different ways traders can utilize support and resistance levels in their trading. Here is a list of the best scanning and charting services available today.Are you looking for an easy trading system to follow that takes all the guesswork out of when to buy and sell stocks?Click a button and this software program will tell you what the stock price will be into the future. I think you will really enjoy tinkering around with this trading algorithm!Download 14 free technical analysis and stock market related eBooks - at no charge!See my list of the top technical analysis books that I think every trader should own.This course teaches you all the common candlestick patterns, shows you the backtesting for each pattern, and then puts it all together into a complete trading system. There are other forms of support and resistance that are not so common. 5. "Support levels" redirects here. This means that the price is more likely to "bounce" off this level rather than break through it. Short term traders tend to use charts based on interval periods, such as 1 minute (i.e. The thought behind it is that once a market breaks a major support or resistance level, there should be follow through that will allow for further movement in that direction. They include Volume Profile, Price Swing lows/highs, Initial Balance, Open Gaps, certain Candle Patterns (e.g. Sometimes you'll have to eyeball it to get a decent gauge. Open a live account to trade the small exchange products and other futures. However, once the price has breached this level, by an amount exceeding some noise, it is likely to continue falling until meeting another support level. Supply is an area on a chart where sellers are likely going to overwhelm buyers causing the stock to go down.Knowing this, it only makes sense to buy at support and sell at resistance!Stocks run into resistance (supply) because those traders that bought too late and saw the price go down now want to get out at break even so they sell.