Understanding support and resistance levels! Do you know what is it? Most of the time the blue line means support and the pink line means resistance. Support is where the price tends to hit bottom, at that moment it means that the price of a stock tends to reverse. Support is where a level is supporting the price action.
How to identify these levels?
It’s easy when you start to see a trend where a stock tends to bounce when you see it happen once it’s support. And when it happens twice you know it’s a super strong support level.
What exactly is resistance?
Resistance tends to overcome this, so resistance is the opposite of support, so support is where a stock bounces. Resistance is going to be where a stock turns itself around, you will be able to see this price level.
It means that when the price goes up, it reverses the price. So, support and resistance are crucial to understanding where you should be buying and where you should be selling. From the commercial area, it is known that support and resistance give us safe places to fall and give us an indication of where we can end up selling these shares, which is our profit margin.
How do support and resistance levels work?
When everything is set up for support and resistance, it will basically just show you where the price is going to bounce and where it is going to be supported at that point.
Use this as a trader and find a way to catch the break where you want, wait for that reversal buy. The top three stocks to buy are because they are going down to your support the best zone to buy. So, same as an investor also if you already own stocks as an investor and you are looking to add more to your position. Then you are going to wait until they are Zoom in on the other areas, as these will be the safest areas to buy shares.
Conclusion
We hope you have understood what support and resistance are. Support is where more demand for the stock enters, also known as rebound. And resistance is where more supply enters the stock, also known as where it is rejected. Hopefully, this information will be very helpful in understanding these concepts.