Short answer: A support level is a price point where buying interest is strong enough that prices tend to stop falling and bounce back, while a resistance level is a price point where selling interest is strong enough that rising prices tend to stall and turn down. Both are read from a price chart, a graph of a share’s price over time.
Last reviewed: 3 November 2026
At a glance
| Term | What it means | What the chart tends to show |
|---|---|---|
| Support | A price point where buying interest is strong enough to stop a fall | Prices stop falling and bounce back |
| Resistance | A price point where selling interest is strong enough to stop a rise | Rising prices stall and turn down |
| Breakout | A move up through a resistance level | Usually read as a bullish signal (expecting prices to rise) |
| Breakdown | A move down through a support level | Usually read as a bearish signal (expecting prices to fall) |
| Round number | A figure such as 100 or 150 | Often treated as key support or resistance |
What does a support level mean?
Support forms where buyers are willing to purchase a share at a price strong enough to halt a decline. On a chart, the price falls towards that point, pauses, and rises again. Traders read this as a sign that buying interest is concentrated there.
A chart shows that a level has held in the past. It cannot show why buyers stepped in, or whether they will do so again.
What does a resistance level mean?
Resistance is the mirror image. Sellers are concentrated at a price, so a rising share stalls and turns down. One common reason is profit booking, where holders sell to lock in the gains they made on the way up.
As with support, a resistance level describes past behaviour at a price. It does not promise that the next rally will stop at the same point.
Why does a broken level change roles?
When price moves above a resistance level, that old resistance tends to become the new support. When price moves below a support level, that old support tends to become the new resistance. Chart readers watch for this flip.
For example, if a share rises through a resistance level and later falls back to that same price and bounces, the bounce is read as the old resistance now acting as support. The pattern is a tendency seen on charts, not a rule that always holds.
What is the difference between a breakout and a breakdown?
A breakout is a move through resistance, and it is usually read as a bullish signal. A breakdown is a move through support, and it is read as a bearish signal. Both terms describe price action, not the reason behind it.
A breakout can fail. Price can rise above a level for a short time and then fall back below it, so a single move through a level does not confirm a new direction.
Why do round numbers act as levels?
Round numbers such as 100 or 150 are often treated as key support or resistance. Traders place targets and stop-losses at these figures. A stop-loss is an instruction to sell a share automatically if its price falls to a set point.
Because many orders cluster at round figures, they can have a psychological effect on other traders. The number itself has no special property. It matters because of where people choose to place their orders.
How do traders use these levels in a range?
A range-bound market is one where price moves sideways between a ceiling and a floor, without a sustained direction. In such a market, traders may buy near support and sell near resistance. A trend, by contrast, is a sustained direction of prices, up or down.
This approach carries a clear catch. When a market is in a clear trend, the level may break, and a trade placed on the assumption that the level will hold can lose money.
Where are the risks?
Consider a hypothetical example. Suppose a share trades at Rs 102, just above a support level at Rs 100. A trader buys 10 shares at Rs 102, for Rs 1,020, and sets a stop-loss at Rs 98.
If the stop-loss triggers at Rs 98, the sale brings in Rs 980, a loss of Rs 40. That loss is 4 rupees per share multiplied by 10 shares. If the support breaks and the price keeps falling, the loss is set by where the sale happens, not by the level the trader expected to hold.
The example shows only the arithmetic. It is not a suggestion to trade this way. The key point is that a level is a tendency on a chart, and the level can break.
Frequently asked questions
Does a support or resistance level guarantee that price will reverse?
No. Support tends to stop prices falling and bounce them back, and resistance tends to stall rising prices, so both describe tendencies rather than certainties. Levels can break.
What is the difference between a breakout and a breakdown?
A breakout is a move through resistance, usually read as a bullish signal. A breakdown is a move through support, read as a bearish signal.
Why are round numbers like 100 or 150 treated as levels?
Traders place targets and stop-losses at these figures, and the numbers have a psychological effect. That clustering of orders is why they are often treated as key support or resistance.
Is trading between support and resistance risky in a trend?
Yes. In a clear trend the level may break, so an approach that works in a range carries more risk when the market is trending.
Sources and last check
Facts in this article were checked against the sources below on 3 November 2026. Rules and figures can change; check the primary source before acting.
- kotakneo.com (broker education)
- zerodha.com (broker education)
- icicidirect.com (broker education)
- dhan.co (broker education)
- upstox.com (broker education)
- groww.in (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.
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