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Support and Resistance Levels

Support_and_Resistance_Levels

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renjithkunnumpurath
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42 views3 pages

Support and Resistance Levels

Support_and_Resistance_Levels

Uploaded by

renjithkunnumpurath
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Support and Resistance Levels: Key Concepts for Traders

Support and resistance levels are fundamental concepts in technical analysis, providing traders with

clear entry and exit points.

Definitions:

- Support: A price level where buying pressure outweighs selling pressure, preventing further price

decline.

- Resistance: A price level where selling pressure outweighs buying pressure, preventing further

price ascent.

How to Identify:

1. Historical Levels: Look for price points where reversals or consolidations occurred.

2. Round Numbers: Psychological levels like 100, 1000 often act as support or resistance.

3. Trendlines: Use diagonal lines connecting highs or lows to identify dynamic support or resistance.

4. Moving Averages: Act as dynamic support or resistance in trending markets.

Applications:

- Breakouts: Watch for price breaking through support or resistance for strong momentum.

- Retests: After a breakout, price often retests the level, providing a safer entry point.

- Range Trading: In a sideways market, buy near support and sell near resistance.

Best Practices:

- Combine with volume analysis to confirm breakout strength.

- Use higher timeframes to identify significant levels for better reliability.


Support and resistance levels are fundamental concepts in technical analysis, providing traders with

clear entry and exit points.

Definitions:

- Support: A price level where buying pressure outweighs selling pressure, preventing further price

decline.

- Resistance: A price level where selling pressure outweighs buying pressure, preventing further

price ascent.

How to Identify:

1. Historical Levels: Look for price points where reversals or consolidations occurred.

2. Round Numbers: Psychological levels like 100, 1000 often act as support or resistance.

3. Trendlines: Use diagonal lines connecting highs or lows to identify dynamic support or resistance.

4. Moving Averages: Act as dynamic support or resistance in trending markets.

Applications:

- Breakouts: Watch for price breaking through support or resistance for strong momentum.

- Retests: After a breakout, price often retests the level, providing a safer entry point.

- Range Trading: In a sideways market, buy near support and sell near resistance.

Best Practices:

- Combine with volume analysis to confirm breakout strength.

- Use higher timeframes to identify significant levels for better reliability.


Support and resistance levels are fundamental concepts in technical analysis, providing traders with

clear entry and exit points.

Definitions:

- Support: A price level where buying pressure outweighs selling pressure, preventing further price

decline.

- Resistance: A price level where selling pressure outweighs buying pressure, preventing further

price ascent.

How to Identify:

1. Historical Levels: Look for price points where reversals or consolidations occurred.

2. Round Numbers: Psychological levels like 100, 1000 often act as support or resistance.

3. Trendlines: Use diagonal lines connecting highs or lows to identify dynamic support or resistance.

4. Moving Averages: Act as dynamic support or resistance in trending markets.

Applications:

- Breakouts: Watch for price breaking through support or resistance for strong momentum.

- Retests: After a breakout, price often retests the level, providing a safer entry point.

- Range Trading: In a sideways market, buy near support and sell near resistance.

Best Practices:

- Combine with volume analysis to confirm breakout strength.

- Use higher timeframes to identify significant levels for better reliability.

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