Rich,
Support and resistance are prices at which a stock has a history of either bouncing up or down. Think of support as the floor of a room and resistance as the ceiling and the stock price as a rubber ball. When the stock hits the floor it bounces upwards and when it hits the ceiling it bounces downwards. Support and resistance are sometimes easier to see with a line chart. A line chart is based on the closing price each day as opposed to candlesticks which show you the open, close, high, and low. If you use a line chart you want to draw lines at the price where the line chart touches at least 3 times. The more times the line chart touches a support or resistance line, the stronger the support or resistance is. Sometimes the lines are horizontal, and sometimes they are at an angle if the stock is trending up or down. I like to go back at least six month when plotting these out.
These lines are very important because they are something institutional traders and market makers are looking at. A lot of times they will sell s lot of shares when a stock hits resistance and buy a lot of shares when a stock hits support. These are the guys whose stock purchases really drive the price of the stock. We are just spectators hoping ride the coat tails of their moves to make a profit.
Taking the room analogy a step further - think of rooms or stories in a multiple story building. When the stock price breaks through the ceiling (resistance) of the current floor, it becomes the floor (support) of the next story above it. When the stock price drops below the floor (support) of the current floor, it becomse the ceiling (resistance) the next story below it.
If you get a good charting package, take a few minutes every night plotting support and resistance based on these principles and you will get very good at it quickly.
RB.