Resistance and support levels

A support level is a price level that an asset has difficulty falling below due to buying pressure. It is often seen as a “floor” or a level below which the price is unlikely to fall. Support levels are created when there are more buyers than sellers at a particular price level, and these buyers are willing to step in and purchase the asset when its price reaches that level. In technical analysis, traders may look to buy an asset at a support level, anticipating a price reversal or “bounce” off the support level.

A resistance level is a price level that an asset has difficulty breaking through due to selling pressure. It is typically seen as a “ceiling” or a level above which the price is unlikely to rise. Resistance levels are created when there are more sellers than buyers at a particular price level, and these sellers are willing to sell the asset when its price reaches that level. In technical analysis, traders may look to sell an asset at a resistance level, anticipating a price reversal or “pullback” from the resistance level.