What is Support and Resistance in Stock Market?

Introduction

Have you ever wondered why stock prices bounce back from certain levels or suddenly drop after rising for a while? It almost feels like there’s an invisible force stopping them, right? That force is what traders call support and resistance.

Imagine a ball bouncing between the floor and the ceiling. The floor stops it from falling further—that’s support. The ceiling prevents it from going higher—that’s resistance. This is a simple but powerful way to understand how prices move in the stock market.

In this guide, we’ll break down the concept of support and resistance in a conversational, easy-to-understand manner. No complicated charts, no confusing jargon—just clear insights. And if you’re from Chennai looking to master these concepts, we’ll also point you toward some stock market courses in Chennai and trading classes in Chennai.

Learn what is support and resistance in stock market. Explore stock market courses in Chennai & trading classes in Chennai for better trading skills.

Understanding the Basics of Stock Price Movements

Before diving into support and resistance, it helps to understand one thing: stock prices move because of supply and demand. When more people want to buy a stock than sell it, the price goes up. When more people want to sell, the price drops.

This constant push and pull creates natural points where the price tends to reverse or slow down. That’s where support and resistance come into play.

What is Support in the Stock Market?

Support is a price level where a stock tends to find buying interest. It’s like a safety net. When the price drops to this level, buyers often step in, pushing the price back up.

Think of it like a rubber band. The more you pull down, the more likely it is to bounce back. Support behaves similarly—it resists downward movement.

Example:
If a stock keeps bouncing back from ₹500 multiple times, ₹500 is the support level.

What is Resistance in the Stock Market?

Resistance is the opposite of support. It’s a price level where a stock tends to face selling pressure. When a stock approaches this level, sellers jump in, and the price falls back.

Example:
If a stock keeps rising up to ₹750 but never crosses it, then ₹750 is acting as the resistance.

The Psychology Behind Support and Resistance

This isn’t just numbers—it’s psychology. Why?

• Support happens because investors believe a stock is cheap at that level.

• Resistance happens because investors feel it’s expensive there.

People’s emotions—fear, greed, hope—drive these decisions, which in turn form patterns.

How to Identify Support and Resistance Levels

There’s no magic formula, but here are some practical ways:

• Historical Prices: Look at past price points where the stock reversed.

• Moving Averages: Popular tools like the 50-day or 200-day moving average often act as dynamic support/resistance.

• Volume: High-volume zones on the chart often suggest important levels.

• Round Numbers: Prices like ₹100, ₹500, or ₹1000 often act as psychological levels.

Types of Support and Resistance

There are various forms:

1. Horizontal Support/Resistance
   Flat levels where prices consistently reverse.
2. Trendlines
   Diagonal support/resistance lines drawn by connecting highs or lows.
3. Moving Average Support/Resistance
   The price may bounce off commonly used moving averages.
4. Fibonacci Levels
   Advanced traders use these percentages to predict reversals.

Support and Resistance in Technical Analysis

If you’ve ever looked at a stock chart, you’ll see zig-zag patterns. Technical analysis uses these patterns to predict future movement.

Support and resistance are essential tools in this analysis, helping traders determine entry and exit points.

Many stock market courses in Chennai offer in-depth training on these techniques, making learning easier for local enthusiasts.

Using Charts to Spot Support and Resistance

Here’s how you can do it visually:

• Step 1: Open a candlestick chart of the stock.

• Step 2: Zoom out to see historical data.

• Step 3: Mark levels where the stock reversed multiple times.

• Step 4: Validate using volume spikes or news events.

Platforms like TradingView or Zerodha’s Kite are great for practicing this.

How Traders Use These Levels to Make Decisions

Professional traders don’t guess—they use strategy.

• Buy near support, sell near resistance.

• Place stop-loss below support, or above resistance to manage risk.

• Use breakouts (when price crosses support or resistance) to enter trends.

Knowing how to do this can turn an amateur into a smart trader.

False Breakouts: When Support and Resistance Fail

Not every level holds. Sometimes, prices break through and then quickly reverse. These are false breakouts, and they can trap beginners.

To avoid them:

• Wait for confirmation (volume increase, candle close beyond the level).

• Avoid trading during major news releases.

• Always use a stop-loss.

Why These Concepts Matter for Beginners

If you’re just starting out, learning about support and resistance is like learning how to read road signs before driving.

It helps you:

• Understand price behavior.

• Make safer trading decisions.

• Avoid emotional trades.

And if you’re in Chennai, taking trading classes in Chennai will give you the edge to apply this practically.

Real-Life Examples of Support and Resistance

Let’s look at a real-world scenario:

Example: Infosys Ltd.

• Between Jan and March, it bounced multiple times at ₹1400. That’s support.

• It couldn’t cross ₹1550 in April and May. That’s resistance.

These levels were used by many traders to buy low and sell high.

Tips for Practicing Support and Resistance Analysis

Here’s how to get better:

• Practice with demo accounts.

• Start with daily charts before moving to shorter timeframes.

• Keep a trading journal.

• Attend live market sessions offered by local institutes.

Stock Market Courses in Chennai: Where to Learn More

If you’re serious about trading, consider joining courses that focus on practical, hands-on learning.

Popular stock market courses in Chennai include:

• Nifty Trading Academy

• FinTree

• EQSIS (known for real-time trading exposure)

• NSE Academy certified programs

• IIFL Trading Institute

Many of these also offer trading classes in Chennai both online and offline.

Final Thoughts and Practical Takeaways

Support and resistance may sound basic, but they form the foundation of technical trading. Understanding these concepts can help you make smarter decisions, avoid panic, and build confidence in your trading journey.

Like a GPS system, they guide you through the unpredictable terrain of stock prices. And with the right stock market courses in Chennai, you can become a confident trader who understands not just when to enter or exit—but why.

FAQs

What is support and resistance in stock market?

Support is the level where a stock usually stops falling and bounces back, while resistance is where it often stops rising and pulls back.

How do I identify support and resistance levels?

You can identify them by checking historical reversal points, using trendlines, moving averages, or observing high-volume price zones.

Can support become resistance?

Yes! When a support level breaks, it can turn into resistance if the price tries to rise again. The same applies in reverse.

Are support and resistance reliable for intraday trading?

They are widely used in intraday trading. However, you should combine them with indicators like RSI or MACD for better accuracy.

Where can I find good stock market courses in Chennai?

You can check out places like Eqsis, FinTree, and Nifty Trading Academy. Many offer both beginner and advanced trading classes in Chennai.