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In financial markets, identifying key levels like support and resistance is essential for traders looking to optimize their strategies. Support refers to a price level where an asset tends to stop falling and finds buyers, signaling demand. Conversely, resistance is a price level where selling pressure exceeds buying pressure, causing the price to halt its upward movement. These levels are crucial for both short-term and long-term traders.

Spotting support and resistance can be done by examining historical price charts. Traders often use horizontal lines to mark these levels based on previous price action. For instance, a stock that repeatedly fails to drop below a certain price exhibits a support level. On the other hand, if it struggles to break above a specific price, this forms a resistance level.

Understanding these levels can guide traders in making decisions. For example, buying near support may present a good entry point, while selling at resistance could lock in profits. However, if the price breaks through these levels, it may signal a potential trend reversal or continuation, offering more opportunities. Combining support and resistance with other indicators, such as moving averages or trend lines, can provide a more comprehensive trading strategy.

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