Support and resistance in simple terms is shorthand for price levels where moves down or moves up have stopped in the past. The idea is not new. A hundred years ago books referred to such levels, even if they didn’t use the words support and resistance. The basic assumption the trader makes when placing trades using these levels is that if these levels have stopped price moves in the past they will do so again; and if they don’t the signal to exit should be clear.
Let’s look at a chart of the FTSE 100 from mid-2009. The chart shows an area of resistance and an area of support, which represent key areas in the continual struggle between the bulls and the bears.