⚖️ Support & Resistance
What does support and resistance mean?
Support and resistance are two of the most important concepts in technical analysis in cryptocurrency trading 📊.
Support is a price level at which the price tends to stop or bounce upwards, as it represents a "strong buying area".
Resistance is a level that is difficult for the price to exceed upwards, as it is a "strong selling area" where the price often retraces downwards 🔁.
How does support work?
When the currency drops and approaches a support level, buyers intervene strongly, creating buying pressure that drives the price up 📈.
How does resistance work?
When the currency rises and approaches a resistance level, sellers start taking profits, leading to selling pressure and a drop in price 📉.
Are support and resistance fixed?
No! Support can turn into resistance and vice versa, after the price breaks through either level:
If the price breaks resistance, it may become a new support 🔄.
And if support is broken, it may turn into resistance in the future.
Tools to identify them 🔍
Horizontal lines on the chart.
Moving Averages.
Indicators like "Bollinger Bands" or "Fibonacci".
Summary
Your understanding of support and resistance levels enhances your trading decisions, allowing you to act with confidence and awareness 👌.
Monitor these levels closely, as they are keys to price behavior in the market 🔑.
