Understanding support and resistance levels on a candlestick chart can assist you identify target price to either buy or sell. Support price is that the price at which you’ll expect more buyers than sellers. Support level is the price on the chart, when traders can expect a maximum demand for a stock, in buying terms, coming its way.
An important level market participant that you must look for in a falling market, the support resistance indicator more often than not acts as a trigger for buying. With the worth of securities dropping, the demand for shares increases, and this forms the support line.
The resistance level on a candlestick chart is that the price once you can expect more sellers than buyers. It prevents the worth from rising further and resistance level indicates a price point on the chart when traders expect a maximum supply, in selling terms, for a specific stock.
Always above the current market price, resistance often acts as an indicator to sell. Resistance level one of the key metrics which market participants have a keen eye on in a rising market. To put it simply, support and resistance are opposite to each other.
Support & Resistance provides analysts and traders with a key overview of the foremost important levels within the market, and on the charts. These Support & Resistance zones are derived from bouncing spots from the past. Basically, the worth reaches a spot where it reverses into the other direction, which successively creates a Support & Resistance level. Support & Resistance levels are a commonly used element within the planet of technical analysis, in conjunction with trend and price patterns. The seven main benefits of using Support & Resistance zones are summarised below. Support and Resistance plays a key role in:
i. Identifying bounce or reversal spots
ii. Measuring breakouts
iii. Trading breakouts
iv. Trading bounces
v. Finding targets
vi. Avoiding weak setups just before S&R
vii. Adding confluence to your analysis