In finance, Resistance is a term used to describe a price level at which a financial instrument, such as a stock, is expected to experience difficulty in rising above. Resistance levels are often seen as ceilings, as the price of the financial instrument may bounce off the resistance level and fall back down. Resistance levels can be identified by analyzing past price trends and identifying areas where the price has previously struggled to break through.An example of resistance in action might be a stock that has been trading between $50 and $60 for an extended period of time. If the stock's price reaches $60 and then begins to fall back down, the $60 level may be seen as a resistance level. If the stock's price subsequently rises again and once again reaches $60, but is unable to break through and falls back down, the $60 level may be considered a strong resistance level.On the other hand, support is a term used to describe a price level at which a financial instrument is expected to find support, or a level where it is likely to stop falling. Support levels are often seen as floors, as the price of the financial instrument may bounce off the support level and rise back up. Support levels can also be identified by analyzing past price trends and identifying areas where the price has previously found support and stopped falling.An example of support in action might be a stock that has been trading between $40 and $50 for an extended period of time. If the stock's price falls to $40 and then begins to rise back up, the $40 level may be seen as a support level. If the stock's price subsequently falls again and once again reaches $40, but is able to bounce back up, the $40 level may be considered a strong support level.
