Support and resistance: how to mark levels on a chart

Support is a level or zone where a price decline has repeatedly stopped because buyers outweighed sellers. Resistance is the analogous level above price, where supply has stopped rallies. Levels are drawn from previous lows and highs and from places where price reacted repeatedly. It is better to treat them as zones than as exact lines.

After a break, support can become new resistance and vice versa, but that is not a rule. A level can be broken, and a break is not always lasting: it can be false (a fakeout), after which price returns. Levels are not a sure thing, only places with a higher probability of a reaction. Used on their own, like any technical analysis tool, they give false signals.