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Support is a price level where buying interest tends to halt a decline, acting like a floor. Resistance is a level where selling pressure tends to cap a rise, acting like a ceiling. These zones form where supply and demand have previously shifted the balance. Traders watch them because price often reacts at these levels, though they represent probable areas rather than exact guaranteed turning points.

Look for price levels the market has repeatedly struggled to break above or bounce from. Connect prior swing highs to map resistance and swing lows to map support; the more times a level is tested, the more significant it becomes. Round numbers, previous highs and lows, and high-volume zones often act as levels. Treat them as zones, not precise lines.

Support and resistance may work because orders and trader attention cluster around previously important price areas. They are not guaranteed levels, and apparent reactions can also reflect liquidity and market structure. Treat them as zones and probabilities, not fixed barriers.

When price breaks convincingly through a level, the roles often reverse: broken resistance can become new support, and broken support can become new resistance. A break may signal a shift in the supply-demand balance and the start of a new move. However, false breakouts are common, where price briefly pierces a level then reverses, so confirmation and stop-losses are important.

Traders use support and resistance to plan entries, exits and stop levels, often alongside trend, volume and other confirmation. On leveraged stock and index CFDs, these levels can help define a trade idea, but execution, spread, slippage and gaps still affect the result.

A common mistake is treating support and resistance as exact prices or guaranteed turning points. These levels are zones and can be pierced before price reacts. Confirmation, a suitable stop distance and position sizing can reduce the impact of failed reactions, but cannot prevent losses.