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5. Technical Analysis > Support and Resistance

Support and Resistance

Knowing how to recognize and profit from levels of support and resistance can improve your trading success.

In trading, supply and demand is easy to spot. As the price of a stock or other investment drops, it reaches a price at which enough traders and investors are willing to buy, and its price stops falling and even starts to head back up as the buying starts. Conversely, as the price of a stock or investment increases, it reaches a price at which no trader or investor is willing to buy, and the excess supply of stock causes the price to stop increasing and head back down. By learning to identify levels of support and resistance and by understanding the implications when those levels are broken, you can improve the results of both your technical trading and your fundamental analysis investing.


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