Think of security prices as the result of a head-to-head battle between a bull(the buyer) and a bear(the seller).The bulls push prices higher and the bears push prices lower.The direction prices actually move reveals who is winning the battle.

Markets cycle between support and resistance. Support is a wall of buyers while resistance is a wall of sellers.

THE BATTLE BETWEEN BUYERS/SELLERS, BULLS/BEARS, SUPPORT/RESISTANCE, DEMAND/SUPPLY

A market goes up until it hits a wall of sellers. This wall is composed of people who bought the market before it went down, so they are losing money and are just waiting until the price comes back upto the price where they bought. When price comes back upto their buying price, they sell so they can break even. There are those buyers who bought at the lower price and wait for price to hit the wall of sellers so they can sell and take profits. The people who sell short at the wall, attempting to profit from price bouncing back down off the wall of sellers. In summery the wall of sellers is composed of three elements of traders those trying to break even, profit takers and short sellers.

A market goes down until it hits a wall of buyers. This wall is composed of people who sold short the market before it went up, so they are losing money and are just waiting until the price comes back down to the price where they sold short. When price comes back down to their selling price, they buy back their position so they can breakeven. There are those sellers who sold at the higher price and wait for price to hit the wall of buyers so they can buy back and take profits. The people who buy at the wall attempting to profit from price bouncing back up off the wall of  buyers. In summery the wall of buyers is composed to three elements of traders those trying to breakeven, profit takers and buyers looking to profit from the upward bounce.       

The foundation of most technical analysis tools is rooted in the concept of supply and demand.

Resistance is equivalent to "supply" line. When the prices increase, the quantity of sellers also increases, as more investors are willing to sell at these higher prices. When too much selling occurs, however, prices retreat. When this happens repeatedly near a specific price level, resistance forms at that price level.

Support is equivalent to "demand" line. When the prices decrease, the quantity of buyers increases, as more investors are willing to buy at lower price. When too much buying occurs, however, prices rise. When this happens repeatedly near a specific price level, support forms at that price level.  

In a free market, support and resistance lines are continuously changing. As investor expectations change, so do the prices buyers and sellers feel are acceptable. A breakout above a resistance level is evidence of an upward shift in the demand line as more buyers become willing to buy at higher prices. Similarly, the failure of support level shows that the supply line has downward.