Today we dive into the support and resistance concept with our trade set up .Those who are new to the group kindly go through the previous article.
Support and Resistance: Technical Indicators
Support and Resistance levels are crucial concepts in technical analysis used by traders to make informed decisions. Here’s a brief overview:
Support
Definition: A price level where a downtrend can pause or reverse due to increased buying interest.
Characteristics:
Acts as a floor for prices.
Often identified at previous lows.
Traders may look to buy near support levels.
Resistance
Definition: A price level where an uptrend can pause or reverse due to increased selling interest.
Characteristics:
Acts as a ceiling for prices.
Often identified at previous highs.
Traders may look to sell or short near resistance levels.
Key Points
Trend Reversal: Prices tend to reverse direction at these levels.
Breakouts: When prices break through support or resistance, it may indicate a continuation of the trend.
Volume: Higher trading volume at these levels can strengthen the significance of support and resistance.
Summary
Understanding support and resistance helps traders identify potential entry and exit points in the market, enhancing their trading strategies.