Hello everyone! Recently, many friends have given me feedback that although they find my market analysis very accurate, there are misunderstandings about some professional terms, leading to missed opportunities or operational errors. Today, I will explain the core logic of support and resistance levels in the most straightforward way possible.

One, Basic Rules of Market Operation

Market price fluctuations are composed of both support and resistance levels. When the market reaches a resistance level, it usually retreats, and when it reaches a support level, it often rebounds. This is the fundamental reason for the zigzag trend shown in candlestick charts.

Two, Detailed Explanation of Resistance Levels

Definition:

When the price rises to a specific position, a resistance area is formed due to a surge in selling, known as the resistance level. Like game levels, resistance levels are also divided into multiple tiers (first, second, third resistance levels, etc.).

Operating logic:

1. Breaking the first resistance level indicates strong bullish momentum, and the market may continue to rise

2. As it pushes towards higher resistance levels, momentum will gradually weaken (just like running requires rest)

3. The resistance level is an ideal position to close long positions or open short positions

Practical case (BTC):

If BTC stabilizes above 68,800 and starts a 4-hour level rebound, then:

- Key resistance levels: 69,500-69,900

- Operating strategy:

✓ Long positions can take profits in batches in this area

✓ Short positions can attempt to enter with light positions

✓ If there is a strong breakout, manually stop loss and wait for the next resistance level

> Important reminder: Avoid holding positions! Breaking through the resistance level indicates strong bullish momentum; stubbornly holding positions may result in giving up profits.

Three, Detailed Explanation of Support Levels

Definition:

When the price drops to a specific area, the influx of buying creates a support effect, known as the support level. There is also a multi-level support system.

Operating logic:

1. The first touch of a support level usually results in a technical rebound

2. Continuously breaking multiple support levels indicates a bearish dominance

3. Support levels are suitable for closing short positions or setting up long positions

Practical case (ETH):

If ETH cannot stabilize above 2,465, it may test lower levels:

- Key support levels: 2,410/2,383

- Operating strategy:

✓ Short positions can take profits in this area

✓ Long positions can be tried with light positions

✓ If the break is effective, immediately stop loss

Four, Comprehensive Trading Strategy

1. Day trading advice:

- When there is no significant news, prioritize operating at the first support/resistance level

- Conservative investors can wait for the second and third key levels to re-enter

2. Position management iron rule:

- Single trade position ≤5% (regardless of leverage)

- Reject the "all-in" mentality and maintain long-term combat ability

3. Market awareness upgrade:

Many so-called "teachers" are merely placing long orders at support levels and short orders at resistance levels, charging high tuition fees. In fact, I share these core logic for free every day.

Five, Risk Warning

Financial markets do not have 100% accurate predictions; contract trading is essentially a probability game. Always remember:

- Strictly set stop losses

- Reject the anti-position mentality

- Maintaining a stable trading mindset is more important than pursuing high profits

If you have any other questions, feel free to leave a message for communication. Market opportunities are infinite; let us continue to profit with professional methods and refuse to be cut by others!

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