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Spot and Resistance in Trading: Key Concepts

In trading, understanding spot price and resistance levels is crucial for making informed decisions. The spot price refers to the current market price at which an asset, like a stock or commodity, can be bought or sold for immediate delivery. It reflects real-time supply and demand dynamics, constantly fluctuating with market sentiment.

On the other hand, resistance is a price level where an asset historically struggles to rise above. When a stock or asset approaches this level, selling pressure tends to increase, preventing further upward movement. This resistance creates a psychological barrier for traders, leading many to sell their positions, expecting the price to fall. If the resistance is strong enough, the price may bounce back downward. However, if the asset breaks through resistance with high trading volume, it could signal a bullish trend, indicating further upward momentum.

Understanding these concepts can help traders identify entry and exit points, optimize strategies, and mitigate risks. By analyzing spot prices in relation to historical resistance levels, traders can anticipate potential price reversals or breakouts, increasing their chances of making profitable trades.

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