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Support Levels
Definition: A support level is a price point where a downtrend is expected to pause due to a concentration of demand. It represents a level where buyers tend to enter the market, which prevents the price from falling further.
Identifying Support: Support levels can be identified by looking at past price movements. If the price has bounced off a certain level multiple times, that level may be considered support.
Trading Strategy: Traders often look for buying opportunities around support levels, anticipating that the price will rise again after hitting this level.
Resistance Levels
Definition: A resistance level is a price point where an uptrend is expected to pause due to a concentration of supply. It represents a level where sellers tend to enter the market, which prevents the price from rising further.
Identifying Resistance: Resistance levels are identified similarly to support levels. If the price has hit a certain level multiple times and failed to break through, that level is considered resistance.
Trading Strategy: Traders often look for selling opportunities around resistance levels, anticipating that the price will drop after reaching this point.