What is resistance and support?

In trading, support and resistance are key concepts used to analyze the price movements of financial instruments such as stocks, forex and commodities.

Support refers to a price level at which buying pressure is strong enough to prevent the price from falling further. In other words, this is a level where the demand for a particular asset exceeds its supply, causing the price to bounce back up. Traders often use support levels as an entry point to buy a financial instrument. Support levels can be identified through technical analysis by looking at charts and identifying areas where the price has previously bounced off.
Resistance, on the other hand, refers to a price level at which selling pressure is strong enough to prevent the price from rising further. This is a level where the supply of a particular asset exceeds its demand, causing the price to fall back down. Traders often use resistance levels as an exit point to sell a financial instrument. Resistance levels can also be identified through technical analysis by looking at charts and identifying areas where the price has previously struggled to break above.

Support and resistance levels can be drawn on charts as horizontal lines, with the support line being drawn below the current price and the resistance line being drawn above the current price. These lines can be useful in identifying potential levels of buying and selling pressure.

It should be noted that support and resistance levels are not always exact and can sometimes be broken if buying or selling pressure is strong enough. Traders should use other forms of analysis and risk management strategies to operate successfully in the market.

In summary, support and resistance are key concepts in trading that traders use to identify potential buying and selling levels of financial instruments. Technical analysis can be used to identify support and resistance levels by analyzing charts and price movements. It is important for traders to use support and resistance levels in conjunction with other forms of analysis and risk management strategies for successful trading.

Basic Support and Resistance



Advance Support and Resistance