Support and Resistance

Support and resistance are fundamental concepts in technical analysis. Support is a price level where demand is strong enough to prevent further decline. Resistance is where supply is strong enough to prevent further advance. These levels are created by previous price action, round numbers, moving averages, and options market mechanics (max pain, gamma walls).

• Previous highs/lows — The most common source of support and resistance.
• Round numbers — Stocks often stall at $50, $100, $200 due to psychological anchoring.
• Moving averages — 50-day and 200-day SMA act as dynamic support/resistance.
• Options levels — Max pain, gamma flip points, and large OI strikes create mechanical support/resistance.
• Role reversal — Once broken, support becomes resistance and vice versa.