WHAT IS SUPPORT AND RESITENCE WITH EXAMPLE

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 Support and resistance are key concepts in technical analysis that are used to identify levels at which an asset's price may experience a pause in its movement or reverse direction.


Support refers to a level at which there is buying pressure that prevents an asset's price from falling further. It is a level at which demand for the asset is greater than the supply, and buyers are willing to step in and buy the asset at that price. Support levels can be identified on a chart by looking for areas where the price has bounced back up after reaching a certain level multiple times. For example, let's say the stock of XYZ company has a support level at $50. This means that every time the stock price falls to $50, there is a high likelihood that buyers will step in and purchase the stock, which will push the price back up.


Resistance, on the other hand, refers to a level at which there is selling pressure that prevents an asset's price from rising further. It is a level at which supply of the asset is greater than the demand, and sellers are willing to step in and sell the asset at that price. Resistance levels can be identified on a chart by looking for areas where the price has reached a certain level multiple times but has been unable to break through it. For example, let's say the stock of XYZ company has a resistance level at $100. This means that every time the stock price rises to $100, there is a high likelihood that sellers will step in and sell the stock, which will push the price back down.


In technical analysis, traders use support and resistance levels to make trading decisions. For example, if a trader believes that a stock is likely to bounce back up from a support level, they may enter a long position (buy the stock) at that level. Conversely, if a trader believes that a stock is likely to be unable to break through a resistance level, they may enter a short position (sell the stock) at that level.



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