Support and resistance

Support and resistance are price levels where an asset has repeatedly paused or reversed. Support is a level below the current price where buying has tended to stop declines; resistance is a level above where selling has tended to halt rallies.

These levels often form around previous highs and lows, round numbers such as $100,000 for bitcoin, and areas where a lot of trading took place. Traders use them to plan entries, stop-losses and take-profit targets. When price breaks decisively through resistance, that level often becomes new support, and vice versa, a pattern known as a role reversal or "flip".

Support and resistance are zones rather than exact lines, and they work partly because many traders watch the same levels. They can fail, especially during news-driven moves or in thin markets where a single large order can push through. A "fakeout" happens when price briefly breaks a level and then reverses.