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Support & Resistance Levels

Support and Resistance levels is one of the most widely used concepts when it comes to BTCUSD bitcoin crypto online trading. Support & resistance areas are also commonly and often used in trading other trading instruments such as Forex Currencies, Index, precious metals such as Bitcoin and Silver and Commodities.

Support and resistance levels on Bitcoin price charts often serve as barriers, curbing price movements past specific thresholds in either direction.

Support Area

As its nomenclature implies, this level acts to prevent the price from declining below a specific predetermined price threshold.

A support zone stops Bitcoin's price from dropping further. It acts like a floor that keeps the market from falling past that point.

How to Trade Bitcoin Support and Resistance Levels - Key BTCUSD Support and Resistance on Charts

Support Level - Bitcoin Analysis

In the example above, the market price went down until it reached an area of support. After the Bitcoin price reached this point, it bounced back up a little and then kept going down until it reached the support area and bounced up again.

The action of testing the support level, which involves hitting it and then bouncing back, is referred to as support level testing.

A support zone grows stronger with more tests. In the example, it held three times before the downtrend reversed upward.

Once a key level is identified on a Bitcoin chart, traders typically place their buy orders at that level while setting a stop-loss a few pips below for risk management.

Resistance Zone

Resistance level is a level that prevents the prices of Bitcoin from getting pushed upwards above a particular level. This level can therefore be regarded as a ceiling for the price because this level prevents the market price from moving upwards beyond this point.

BTC Support and Resistance on Charts - Find Key Levels in Bitcoin Prices - Analyze BTCUSD Levels

Resistance Level - Bitcoin Analysis

In the example provided earlier, Bitcoin's price rose until it encountered a resistance level. Upon reaching this level, it retraced briefly before resuming its upward movement, eventually testing the resistance area once more.

The resistance level was tested 5 times without going past it: the more times a resistance level is tested without breaking, the stronger it gets.

Once this resistance area has been determined, BTCUSD CryptoCurrency traders will use this level to place their sell orders at this level and at the same time put a stop loss order a couple of pips above this resistance level.

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