$CITY /USDT

Understanding Support and Resistance in Trading

Support and resistance are key concepts in technical analysis, helping traders make informed decisions. Support refers to a price level where an asset tends to find buying interest, preventing the price from falling further. When the price approaches this level, demand usually increases, pushing the price back up. Traders often view this as a "floor" for the asset.

On the other hand, resistance is a price level where selling interest builds, preventing the price from rising further. It's considered a "ceiling," as the asset struggles to break through this level due to increased selling pressure. When an asset hits resistance, traders often sell, anticipating a price drop.

Support and resistance levels can be identified through historical price data. They are dynamic and can shift over time. A former resistance level may turn into support if the price breaks through it, a concept known as a breakout. Similarly, a support level can become resistance if the price falls below it, known as a breakdown.

Understanding these levels allows traders to time entries and exits, manage risk, and make more calculated trading decisions.

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