Support & Resistance

What Is Support?

Support is a price area where buyers have historically shown enough demand to slow or temporarily stop a decline. When price reaches support, buying activity often increases as investors view the stock as offering value at that level.

Support does not guarantee that price will move higher. Instead, it represents an area where buyers have previously entered the market in sufficient numbers to influence price behaviour.

What Is Resistance?

Resistance is the opposite of support. It represents an area where selling pressure has repeatedly prevented price from moving higher.

As a stock approaches resistance, some investors may choose to sell, while others wait to see whether buyers have enough strength to overcome that selling pressure.

Resistance is one of the key concepts used throughout the EdgeBreak platform because every breakout begins by moving above a previously established resistance level.

Why Does Resistance Form?

Resistance often develops because large numbers of market participants are willing to sell at similar prices. This selling pressure may come from investors taking profits, traders exiting losing positions or institutions managing larger portfolios.

Over time, repeated selling at the same level creates a price area that the market begins to recognise as resistance.

The more often price reacts around the same level, the more attention that area typically receives from market participants.

Why Multiple Resistance Tests Matter

One rejection at resistance provides limited information. However, repeated tests of the same resistance level often indicate that buyers continue returning despite previous setbacks.

Rather than viewing repeated tests as weakness, many investors see them as evidence that buying pressure remains persistent.

Eventually, if buying demand becomes greater than available selling pressure, price may move above resistance.

This concept forms one of the foundations of the EdgeBreak NASDAQ Scanner.

Support and Resistance Are Zones

Beginners often draw support and resistance as exact horizontal lines. In reality, these areas are usually better viewed as price zones rather than precise numbers.

Small movements above or below support and resistance occur regularly and should always be interpreted within the context of overall market structure.

Role Reversal

One interesting feature of technical analysis is that resistance can sometimes become support after a successful breakout.

Once buyers establish themselves above resistance, the same price level may attract new buying interest during future pullbacks.

Likewise, broken support can sometimes become new resistance during downtrends.

Understanding this concept helps investors better interpret changing market conditions.

Support & Resistance Inside EdgeBreak

Resistance is one of the primary research characteristics used throughout the EdgeBreak platform.

The NASDAQ Scanner identifies stocks displaying repeated resistance touches before a breakout occurs, while the Breakout Scanner highlights stocks that have already moved above resistance according to the EdgeBreak breakout model.

Rather than relying on resistance alone, EdgeBreak combines resistance analysis with higher lows, market structure, volume behaviour and Smart Money characteristics to support a more complete research process.