What Are Support and Resistance Levels? In technical analysis, support is the price level where a stock tends to find buying interest, preventing further price declines. Resistance, on the other hand, is the price level where selling pressure keeps the stock from rising further.
How Do Support and Resistance Work?
Support: Acts like a floor, where traders expect the stock price to stop falling and possibly reverse.
Resistance: Acts like a ceiling, where traders expect the stock price to stop rising and potentially reverse.
Why Are They Important? Support and resistance levels help traders make buy and sell decisions by identifying potential reversal points. Knowing these levels allows traders to place stop-loss and take-profit orders effectively.
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