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Spot and Resistance in Trading

Spot and resistance are crucial concepts in trading, particularly in technical analysis, where traders look at price charts to predict future movements. Spot price refers to the current market price at which an asset, such as a stock, currency, or commodity, can be bought or sold. It's the real-time price that fluctuates based on market demand and supply. Traders use the spot price to make short-term trades, often looking to profit from immediate price movements.

Resistance, on the other hand, is a price level where an asset struggles to break above. It’s a key point on a chart where sellers tend to step in and prevent the price from rising further. Resistance levels are identified through previous price patterns and are often seen as psychological barriers. When the price approaches resistance, it may reverse or consolidate before either breaking through or falling back.

Traders use these concepts to develop strategies: buying when the price is near a support level (the opposite of resistance) and selling near resistance. However, when an asset breaks through a resistance level, it can signal a strong upward trend, encouraging traders to buy in anticipation of further gains. Understanding spot and resistance helps traders maximize their chances of profitable trades.

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