In the world of investing, especially in the financial market, understanding support and resistance is like having a GPS on a winding road. These two simple but powerful concepts help investors know exactly where they are and where they can go in the market.

What are supports and resistances?

1. Support: This is like the “floor” of the price. It is the point where the market finds buying strength, preventing the price from falling further.

• Example: If support is at $2.34, it means many buyers are willing to enter at that level. If the price gets there, the chance of it going up increases.

2. Resistance: This is the price “ceiling”. It is the point where the market finds selling force, preventing the price from rising any further.

• Example: Resistance at $2.43 indicates that many sellers are positioned. If the price reaches this level, it may have difficulty continuing to move higher.

Why are supports and resistances so important?

1. Decision making: Knowing where the supports and resistances are helps you decide when to buy and when to sell.

• Buy at support: If the price is close to support and shows signs of reaction, it is a good opportunity to enter.

• Sell at resistance: If the price is close to strong resistance, it may be a good idea to take profits.

2. Risk reduction: By identifying support, you can place stops (automatic sell orders) just below it, protecting your capital in case of a breakout.

3. Avoid traps: Many investors enter the market without knowing where these levels are and end up buying high (near resistance) or selling low (near support).

The secret of the investor who never makes mistakes

Knowing where the support and resistance levels are is like reading a treasure map. When you understand these levels,

• You buy with confidence.

• You sell at the right time.

• You don't let yourself get carried away by panic or euphoria.

For example, in the XRP chart we analyzed:

• Support at $2.34: If the price drops to here, it is an interesting zone to buy.

• Resistance at $2.43: If the price reaches this point, it is time to evaluate whether it is worth taking profits.

Golden Tip

Investing is an art, but it is also a science. If you master the basics, such as identifying support and resistance, you will always be one step ahead in the market.

Remember: those who know where the floor and ceiling are will never get lost!


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