Psychological Resistance in financial markets refers to a price level at which selling pressure is anticipated to increase, often due to a significant number of investors who previously purchased an asset at that price and are now seeking to sell at breakeven. This level is based on collective human behavior and past price memory, acting as a barrier to further price increases. It represents a behavioral phenomenon influencing market dynamics. It is a self-fulfilling prophecy for some traders.
Context
In cryptocurrency trading, psychological resistance levels are closely watched by technical analysts as potential points where an upward price movement might pause or reverse. These levels are often round numbers or previous highs that attract selling interest. Recognizing these levels helps traders plan entry and exit strategies.
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