$AMB /USDT

In trading, support and resistance are two fundamental concepts that guide decisions on when to enter or exit a position. They are price levels on a chart where the price tends to reverse its direction. Understanding how to spot these levels can significantly enhance your trading strategy.

Support is the price level where a stock or asset tends to stop falling. At this point, demand is strong enough to prevent further decline. Traders often buy when the price hits support because they expect it to rise from this level.

On the other hand, resistance is where the price tends to stop rising. Sellers emerge at this level, causing the price to reverse downward. Traders often sell when the price hits resistance, anticipating a decline.

Spotting these levels involves looking at past price movements and identifying areas where the price has repeatedly bounced off a specific point. This could be done using technical analysis tools like trendlines, moving averages, or Fibonacci retracement.

Recognizing support and resistance is crucial in setting stop-loss orders, determining entry points, and executing successful trades. They act as psychological levels in the market, representing supply and demand, and are critical for traders aiming to optimize returns.

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