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Understanding IT Support and Resistance in Trading
In trading, support and resistance are key technical analysis concepts used to predict potential price movements. These terms refer to levels where a stock, commodity, or cryptocurrency typically pauses or reverses its trend.
Support is the price level at which an asset tends to stop falling because demand begins to increase. It's seen as a âfloorâ that the price has difficulty breaking below. Traders often buy at this level, expecting the price to rise from there.
On the other hand, resistance is the price level where selling pressure exceeds buying pressure, causing the asset's price to stop rising. It's perceived as a âceilingâ that the price struggles to break through. Traders often sell at this level, anticipating the price to drop.
These levels can shift over time, influenced by market conditions, news, or economic factors. When the price breaks through support or resistance, it can indicate a continuation of the trend or a reversal, providing trading opportunities. Understanding and identifying these levels is essential for technical traders to make informed decisions, set entry and exit points, and manage risk effectively.
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