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 beyond a certain point in a particular direction.

Support

This level stops the bitcoin price of an asset from getting pushed downwards and therefore 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 down until it hit the support again.

This process of hitting a level & bouncing back is called testing the support.

The more times a support is tested and the btcusd market bounces up the stronger it is - the trading example illustrated below this level was tested three times without breaking. Finally the btcusd market bitcoin trend reversed and started heading in 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 cannot break 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 upwards.

The demand to buy bitcoin at this point will be greater and therefore providing a good point to start a buy bitcoin trade, while placing stops 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 reverse or consolidate at this level because once the sellers close their sell trades then momentum of the downward bitcoin trend reduces and a consolidation will happen after which the 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 the resumed going up until it hit the resistance again.

The resistance holds and is tested five 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 Crypto Support & Resistance Zones on Charts

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

These levels form good points where a bitcoin price in an upwards bitcoin trend is likely to reverse after some resistance and start moving downwards in opposite trend 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 stops some pips just above this level.

This resistance level is also used by buyers as a target where to set their take-profit orders for their bullish trades. T

His is another reason why the bitcoin trend is likely to reverse or consolidate at this level because once the buyers close their buy trades then momentum of the upward bitcoin trend reduces and a consolidation will happen after which the direction is likely to reverse and start moving down.

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Support & Resistance Areas

Support

Resistance