Support and Resistance

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When the market moves in a specific direction and then pivots and changes direction, the highest point that was reached before the market changed direction is called the Resistance Level. In the same way, the lowest level the market reaches before the market pivots is called the Support Level.

It is important to note that if the market passes through a resistance level, then that resistance level can also become a new support level. The same applies in the opposite direction. Previous resistance and support levels are also used as an indicator for future pivots and therefore possible entry points into the market.