$NEIRO /USDT

Identifying Support and Resistance in Trading

Support and resistance are fundamental concepts in technical analysis, used to identify price levels at which an asset typically reverses direction. These levels can help traders make informed decisions regarding entry and exit points in the market.

Support is the price level where an asset tends to stop falling and reverse upward. This occurs because buying interest increases as the asset becomes more affordable, creating a "floor." For example, if a stock repeatedly bounces back from $50, this price would be considered its support level.

Resistance, on the other hand, is the price level where an asset stops rising and reverses downward. Sellers tend to dominate at these levels, pushing the price back down, acting as a "ceiling." For instance, if a stock struggles to break above $100, that price would be viewed as its resistance.

By analyzing historical price movements and identifying these key levels, traders can anticipate future price behavior. Breakouts occur when prices move beyond support or resistance levels, often signaling strong trends. However, false breakouts can also happen, making it crucial to combine support and resistance analysis with other technical indicators for better accuracy.

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