What it is
Support and resistance are price areas where advances or declines have repeatedly stalled. The underlying idea is not mystical: at prices where large amounts of trading occurred, there are participants with a reason to act again, whether to defend a position, to exit at break-even, or to work resting orders that were never filled.
How it works
Levels are drawn from prior swing highs and lows, the boundaries of previous consolidations, the previous session's high, low and close, opening prices, round numbers, and dynamic references such as moving averages, VWAP and high-volume nodes. Practically they are zones with width rather than lines: the right question is whether price is being accepted or rejected in an area, not whether it touched a specific figure to the tick.
How traders use it
The most reliable behaviour associated with them is polarity. A resistance level that breaks convincingly tends to act as support afterwards, because the population of trapped and profitable positions has changed sides. Traders use levels to plan entries, to place stops beyond rather than exactly at them, and above all to define where a thesis is wrong.
Where it breaks down
The technique is highly vulnerable to confirmation bias. Draw enough lines on a chart and some will look prescient in hindsight, and any bar with a wick can be described after the fact as a reaction to something. Levels where visible volume actually traded carry more information than levels that were merely touched, and a level tested many times without breaking is being worn down rather than reinforced.
Educational reference. This entry describes how a concept is defined and used. It is not investment advice, not a recommendation, and not a signal. Any rule you build from it should be tested with realistic costs before it is traded, and no historical result guarantees a future one.