Supply & Demand, and Support & Resistance
Support & Resistance
Psychological impacts of support & resistance levels
Support
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Resistance
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- Represent areas where buyers typically stepped in, perceiving the asset as undervalued
- Traders often think of support levels as a safety net, triggering buying pressure
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- Act as a psychological barrier where traders see the asset as overvalued, leading to increased selling pressure
- Traders fear a reversal will happen, causing hesitation, shorting or profit taking
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Supply & Demand
- Like a battleground where supply and demand forces meet.
- Supports represent strong demand, creating a floor
- Resistance signifies strong supply, creating a ceiling
