EUR/CADCertainly, here's a summary of support and resistance with key points:
1. **Support:**
- Support is a price level where buying interest typically emerges, preventing the price from falling further.
- It indicates a zone where demand for the asset outweighs the selling pressure.
- Traders often see support levels as opportunities to buy or enter long positions.
- When the price approaches a support level, it may bounce off and begin to rise.
2. **Resistance:**
- Resistance is a price level where selling interest typically increases, preventing the price from rising further.
- It represents a zone where supply of the asset outweighs buying pressure.
- Traders often view resistance levels as opportunities to sell or enter short positions.
- When the price approaches a resistance level, it may struggle to break through and could reverse direction.
3. **Key Concepts:**
- Support and resistance levels are not exact prices but rather zones or ranges where buying or selling interest is concentrated.
- These levels are identified using various technical analysis tools such as trendlines, moving averages, Fibonacci retracement levels, and chart patterns.
- Support and resistance levels are used by traders to determine entry and exit points, set stop-loss orders, and manage risk.
- They may shift over time and can be breached if there is a significant change in market sentiment or fundamental factors.
- Breached support levels may become new resistance levels, and vice versa.
Understanding support and resistance levels helps traders make informed decisions in trading by identifying potential areas of buying and selling interest, thereby assisting in risk management and trade timing.
