Support and Resistance Strategy Using Technical Indicators
The support and resistance strategy is one of the most well-known methods of technical analysis in the cryptocurrency market and financial markets in general. This strategy is based on identifying areas on the chart where the price often bounces back. Support is the level at which the price tends to stop during a decline, while resistance is the area from which the price is likely to retreat during an ascent.
To increase the accuracy of the analysis, it is preferable to combine this strategy with technical indicators such as the Relative Strength Index (RSI) to identify overbought or oversold conditions, the Moving Average (MA) to determine the overall trend, and the MACD indicator to monitor momentum.
When the price intersects with a support level and the RSI indicator shows oversold conditions, there is a strong opportunity for a bullish rebound. Conversely, if the price encounters resistance with overbought conditions, there is a possibility of a bearish reversal. By using these tools together, traders can improve their decisions, reduce risks, and increase profit opportunities.
