$COMBO /USDT
In trading, support and resistance are key concepts that help identify price levels where an asset might reverse direction. Support is a price level where an asset tends to find buying interest, preventing the price from falling further. Traders often see support as a "floor" that holds up the price. For instance, if a stock repeatedly drops to $50 but doesn’t go below, $50 becomes the support level.
On the other hand, resistance is a price level where selling pressure prevents the asset from moving higher. It's seen as a "ceiling" that caps upward momentum. For example, if a stock struggles to rise above $100, then $100 is considered a resistance level.
Identifying support and resistance can be done through historical price patterns, moving averages, or charting tools. Once identified, traders use these levels to make informed decisions. If the price breaks through a resistance level, it can become a new support level and vice versa.
Understanding support and resistance is crucial for predicting potential price movements, placing stop losses, and setting profit targets. For traders, mastering these concepts provides a strong foundation for more effective technical analysis.
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