Trade Bitcoin Trading

Support & Resistance Areas

Support and resistance form a core idea in crypto charts. They act as barriers that block bitcoin prices from crossing certain points in one direction.

Support

This point stops the bitcoin price of something from being pushed down: it's seen as the floor because it keeps the btcusd market from falling past a certain level.

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 this BTCUSD setup, price stayed above that zone. It marks a spot where Bitcoin can't drop lower.

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

The desire to buy bitcoin at this time will be greater, so it is a good time to start a trade to buy bitcoin, while setting stop loss orders a few pips just below.

This particular level of support is also utilized by traders executing short bitcoin positions as a target point for setting their take-profit orders on those said short sales.

This observation provides another justification for the likelihood of the Bitcoin trend either neutralizing or reversing at this precise juncture. The reason is that once the selling participants (bears) exit their short positions, the driving force behind the preceding downward Bitcoin trend diminishes, leading to a period of consolidation, after which the market direction is poised to potentially 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.

Upon reaching this specific level, the bitcoin price slightly pulled back before continuing its upward trajectory until it encountered resistance once more.

The resistance holds & is tested 5 times without breaking.

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

Once this critical level has been established, traders place their sell orders precisely at this level while simultaneously setting a protective stop loss a small distance above it.

Resistance levels on a crypto Chart - BTCUSD Crypto Support and Resistance Zones on Charts

In the aforementioned example, the btcusd market did not surpass this level. This zone represents a point where the bitcoin price struggles to break through.

These levels make good spots where bitcoin's price, after climbing for a while, is likely to run into resistance and then start heading back down.

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

This explains why the bitcoin trend may consolidate or reverse here. When buyers close their positions, the upward push weakens. A pause follows, and then the price often turns down.

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