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Spot Price & Resistance: A Key Concept in Trading
In trading, spot price and resistance levels are critical concepts that help traders make informed decisions.
The spot price refers to the current market price of an asset, such as a stock, commodity, or currency, for immediate settlement. This real-time price fluctuates due to supply and demand dynamics in the market. Traders monitor the spot price to gauge market sentiment and decide on entry or exit points.
On the other hand, resistance is a price level where an asset tends to encounter selling pressure, preventing it from rising further. Itâs a key technical analysis concept, marking a threshold that prices struggle to break. When an asset approaches a resistance level, traders anticipate a potential price reversal. However, if the price breaks through the resistance, it can indicate strong buying momentum, suggesting the potential for further gains.
Understanding the interplay between the spot price and resistance helps traders manage risk and optimize their strategies. By identifying resistance levels and monitoring the spot price, traders can make more precise predictions about price movements and enhance their chances of profitable trades.
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