Support and resistance are fundamental concepts in technical analysis used to identify price levels where an asset tends to reverse direction. Support refers to a price level at which buying interest is strong enough to overcome selling pressure, preventing the price from falling further. Conversely, resistance is a level where selling interest surpasses buying pressure, causing the price to stop rising. These levels are typically identified through historical price data, where past highs and lows indicate potential future behavior. Traders often use support and resistance to guide their entry and exit points, with the understanding that breaches of these levels may signal the continuation of a trend.
Technical Analysis