Support & Resistance Areas

This is one of most widely used concepts in cryptocurrency and it refers to levels on a chart that tend to act as barriers that prevent the bitcoin price of an asset from getting pushed past a certain point/level in a particular direction.

Support

This level stops the bitcoin price of an asset from getting pushed downwards & ==22==thereforehence it is regarded as the floor because it prevents the btcusd market from moving downwards past a certain point.

Example:

On the trading example illustrated below you can see that bitcoin price moved down until it hit a support

Once bitcoin price hit this level it slightly bounced back up, then resumed going downward until it hit the support again.

The process of hitting a level & bouncing back is termed as testing the support.

The more times a support is tested and the btcusd market bounces up the stronger it is - the example illustrated below this level was tested three times without breaking. Finally the btcusd market bitcoin trend reversed and started heading in the opposite trend direction.

Once this level has been determined traders use it to place their orders to buy bitcoin at the same time putting a stop loss a few pips below it.

Support level on a crypto Chart

In the trading above example the btcusd market did not move below this area. It is an area where bitcoin price can not break lower.

These regions form good points where bitcoin price trend in a downward bitcoin trend is likely to reverse and get support and ==22==startbegin heading and moving upwards.

The demand to buy bitcoin at this point will be greater and ==22==thereforehence providing a good point to start a buy bitcoin trade, while placing stop loss orders some pips just below.

This support is also use by short bitcoin sellers as a target where to set their take profit for their short sell trades.

This is another reason why the bitcoin trend is likely to consolidate or reverse at this specific point because once the sellers(bears) close out their sell positions then force of the downward bitcoin trend reduces and a consolidation will happen after which the trend direction is likely to reverse.

Resistance

This level stops the bitcoin price of an asset from getting pushed upwards these levels are therefore regarded as the ceiling because these levels prevent the btcusd market from moving upwards

Example:

On the trading example illustrated below you can see that bitcoin price moved up until it hit a resistance.

Once bitcoin price hit this level it retraced slightly then resumed going up until it hit the resistance again.

The resistance holds & is tested 5 times without breaking.

More times a resistance area is tested the stronger the it is.

Once this level has been determined traders put their orders to sell at this level & at the same time putting a stop loss a few pips above it.

Resistance levels on a crypto Chart - BTCUSD ==22==CryptoCryptoCurrency Support and Resistance Zones on Charts

In the above example the btcusd market did not move above this area. This region shows an area where bitcoin price can't break above.

These levels form good points where a bitcoin price in an upwards bitcoin trend is likely to reverse after some resistance & start moving downwards in the opposite market direction.

This highlights that the demand to sell bitcoin at this region will be greater and therefore providing a good point to start a sell bitcoin trade, while placing stop loss orders some pips just above this technical level.

This resistance level is also used by buyers(bulls) as a target where to set and place their take-profit orders for their bullish trade positions. T

His is another reason why the bitcoin trend is likely to consolidate or reverse at this particular level because once the buyers(bulls) buyers close out their sell their buy trade positions then power of the upward bitcoin trend reduces and a consolidation will happen after which the direction is likely to reverse & start moving down.

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Support & Resistance Areas

Support

Resistance