Support and Resistance
Support and Resistance are technical concepts that represent price levels where an asset's downward or upward movement is likely to be halted or reversed. Support is a price level where buying interest is strong enough to overcome selling pressure, preventing the price from falling further.
Resistance is a level where selling pressure is strong enough to overcome buying interest, preventing the price from rising higher. These levels are often formed by historical price action, where many participants have placed orders, creating zones of liquidity.
Traders use these levels to identify potential entry and exit points, set stop-losses, and gauge the strength of a trend. When a support or resistance level is broken with high volume, it often signals a continuation of the trend and a shift in the market's perception of value.