- Support levels are positions where the price might stop falling and have a decent probability of bouncing back up.
- Resistance levels are positions where the price might stop rising and have a decent probability of falling back down.
These levels occur due to the concept of demand and supply. For example, a share’s price might be rising because demand is higher than supply. But the price will eventually reach a level where buyers are unwilling to pay, resulting in a decrease in demand — forming the resistance line. In the case where the resistance line is breached, it may then convert into a level of support.