Support and resistance zones are key concepts in technical analysis1 . They represent price levels on a chart where the probabilities favor a pause or reversal of a prevailing trend1 .
Support Zone: This is where a downtrend is expected to pause due to a concentration of demand1 . Buyers step in, preventing the price from falling further1 .
Resistance Zone: This is where an uptrend is expected to pause due to a concentration of supply1 . Sellers step in, preventing the price from rising further1 .
These zones can be identified using trendlines, moving averages, and previous price levels where the asset has reversed direction1 2 . When the price reaches these levels, it often bounces back, but if it breaks through, it can lead to a significant move in the direction of the breakout3 .
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