Support and resistance are fundamental concepts in technical analysis that help traders identify potential reversal points in an asset's price movement.
- Support is a price level where demand is strong enough to prevent the price from falling further. It acts as a "floor," where buyers typically step in, making it a good level to buy.
-Resistance is a price level where selling pressure is strong enough to prevent the price from rising further. It acts as a "ceiling," where traders often sell or take profits.
Key takeaways:
- When the price breaks a support level, it can become a new resistance level, and vice versa.
- These levels help traders plan entry and exit points, manage risk, and anticipate price movement reversals.
- Dynamic support and resistance can be identified using trendlines or moving averages.
Understanding these concepts is essential for effective technical analysis and timing market decisions.
- Support is a price level where demand is strong enough to prevent the price from falling further. It acts as a "floor," where buyers typically step in, making it a good level to buy.
-Resistance is a price level where selling pressure is strong enough to prevent the price from rising further. It acts as a "ceiling," where traders often sell or take profits.
Key takeaways:
- When the price breaks a support level, it can become a new resistance level, and vice versa.
- These levels help traders plan entry and exit points, manage risk, and anticipate price movement reversals.
- Dynamic support and resistance can be identified using trendlines or moving averages.
Understanding these concepts is essential for effective technical analysis and timing market decisions.
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