Support and resistance are price levels where buying or selling has repeatedly turned the market. Support is where fresh buying previously stopped a decline; resistance is where rallies have failed to push higher. They are memory traces of past auction outcomes, not magic lines — but they matter because traders watch the same levels.
How traders use them
In a range-bound stock, buy near support and sell near resistance can work for months. A breakout above resistance (or below support) often signals continuation — e.g. failure to clear $50 repeatedly, then a close above, invites a move to higher ground.
Pin bars and other reversal patterns gain strength at prior support/resistance, pivot points, weekly highs/lows, or Fibonacci levels — see trading-technical-indicator.
Limits
Levels shift as fundamentals change; false breakouts trap traders who treat lines as certainty. Combine with trend context (golden-cross-death-cross, moving averages) and risk/reward on entries — not line touches alone.
Livermore's "line of least resistance" (line-of-least-resistance) is the macro cousin: wait for the market to show which side of the range won before committing size.