In the world of trading, support and resistance are key concepts that help traders identify potential price turning points.
Support:
• Definition: A price level where buying pressure is expected to be strong enough to prevent the price from falling further.
• How it works: When the price approaches a support level, buyers tend to step in, as they see it as a good opportunity to buy at a discounted price. This increased buying pressure can push the price back up.
• Visual representation: On a chart, support is usually represented by a horizontal line that the price has bounced off of in the past.
Resistance:
• Definition: A price level where selling pressure is expected to be strong enough to prevent the price from rising further.
• How it works: As the price approaches a resistance level, sellers tend to emerge, as they see it as a good opportunity to sell at a higher price. This increased selling pressure can push the price back down.
• Visual representation: On a chart, resistance is usually represented by a horizon
