Crypto

What Are Support Level and Resistance In Crypto Trading Strategy?

  • The support level Crypto is the price where demand picks up, and cryptocurrency bounces back after a drop.
  • It is the price at which buyers will become willing to purchase the cryptocurrency, and sellers will become reluctant to part with their coin. In a part where Support Level has been breached, and prices dropping, market participants are in for a stronger bear trend.

Crypto Support Level can become a new Resistance Level if the price drops significantly. If the price revives, the previous Resistance level will become a new Support Level.

What are Support Lines?

You can understand Support level is a price level viewed horizontally that is expected to hold or prevent the price of an asset from falling further.

Support is the level at which demand is strong enough to stop the stock from falling further. In the image above, you can see that each time the price reaches the support level, it has difficulty penetrating that level.

Support and Resistance lines point upwards, each peak higher than the previous one, while the reverse is true in a bear market, with each trough lower than the last.

If it were possible to pinpoint a resistance or support price precisely, then a line would be more than sufficient, and every market participant would know precisely when to enter or exit a position. However, zones are the most accurate pricing we can achieve in the dynamic crypto markets. There is a range of prices around which an asset will bounce, touch on, breakthrough, and fall back from them several times until a significant reversal takes place.

Buying and Selling of Assets

After determining the trendline, it will be easier to understand support lines and resistance levels.

Ideally, the traders will buy assets when the Price is in the Support area and sell them when the price is in the resistance area. Determining price support and resistance area can be challenging. There is always a possibility of a support or resistance level breaking, and the price will go up and down the past level.

The indicators are used to help make decisions when trading and are not an absolute reference. So in technical terms, such as recognizing support levels, it is also necessary to use other aspects, including Fundamental Analysis, before trading.

Conclusion

The support level crypto indicates an increase in the volume of asset purchases when the price is falling. Meanwhile, the resistance level means that many investors choose to sell assets and take profits at that price point.

Support is a price level in a trading chart beyond which an asset will not decline or fall.

Using all these analyses smartly, you can earn marvelous profits in your investments or trading. 

Deepika

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