"A very significant part of the reason
prices appear to “bounce”off
support and resistance levels
is that many traders have observed
this effect and expect to see it in the future!
--
Therefore,
support andresistance is partly
a self-fulfilling prophecy.
Traders buy at support levels
in expectation of the rise in prices
due to the support itself.
--
Traders sell at resistance levels
in expectation of the decline in prices
due to the resistance itself.
--
When multiplied,
these effects make support and resistance
one of the most powerful concepts intrading.
The behavior of market participants
reinforces the effects themselves."
- Curtis Faith
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