Support and Resistance

Support and resistance are fundamental concepts in technical analysis. They provide valuable insights for traders, helping them make informed decisions in the market:

1. Support:

   • Definition: Support is a critical price level where buyers actively enter the market.

   • Function: Buyers increase their demand, preventing further price declines.

   • Strength: At this level, demand outweighs supply.

   • Significance: Support zones indicate potential turning points or areas where price reversals may occur.

2. Resistance:

   • Definition: Resistance represents a crucial price level where sellers become active.

   • Function: Sellers intensify their supply, preventing further price increases.

   • Strength: At this level, supply surpasses demand.

   • Significance: Resistance levels act as barriers, limiting upward movement.

3. Identifying Levels:

   • Traders analyze price charts to locate historical support and resistance levels.

   • These levels often coincide with areas where price has previously bounced off or stalled.

   • Anticipating future price movements becomes possible by recognizing these key levels.

In summary, understanding support and resistance empowers traders to navigate the market effectively and seize trading opportunities.