Buying at support and selling at resistance is a classic strategy in technical analysis. It involves identifying key levels where the price of an asset has historically shown support (where it tends to stop falling) and resistance (where it tends to stop rising).
"Support" refers to a price level where a downtrend is expected to pause due to a concentration of demand or buying interest. Traders often look for buying opportunities when the price approaches or reaches a support level, expecting the price to bounce back up.
"Resistance," on the other hand, is a price level where an uptrend is expected to pause due to a concentration of selling interest or supply. Traders often look to sell or take profits when the price approaches or reaches a resistance level, anticipating a potential reversal or consolidation.
It's important to note that support and resistance levels are not always precise, and they can sometimes be breached temporarily before the price resumes its previous trend. Therefore, it's essential to use additional technical indicators or analysis methods to confirm potential entry and exit points.
Additionally, risk management is crucial when employing this strategy. Traders often use stop-loss orders to limit potential losses if the price breaks through support or resistance levels
"Support" refers to a price level where a downtrend is expected to pause due to a concentration of demand or buying interest. Traders often look for buying opportunities when the price approaches or reaches a support level, expecting the price to bounce back up.
"Resistance," on the other hand, is a price level where an uptrend is expected to pause due to a concentration of selling interest or supply. Traders often look to sell or take profits when the price approaches or reaches a resistance level, anticipating a potential reversal or consolidation.
It's important to note that support and resistance levels are not always precise, and they can sometimes be breached temporarily before the price resumes its previous trend. Therefore, it's essential to use additional technical indicators or analysis methods to confirm potential entry and exit points.
Additionally, risk management is crucial when employing this strategy. Traders often use stop-loss orders to limit potential losses if the price breaks through support or resistance levels