Disclaimer: The information's contained in this explanation is the result of my understanding of Bitcoin Support and Resistance and may contain some errors. Search and confirm about it.
Table of contents 1.
Introduction 2.
What are Bitcoin support and resistance levels? 3.
How to use them to predict the price? 4.
OCO order with support and resistance levels 5.
What is support-resistance flip? 6.
Strength of a support or resistance area 7.
Psychological support and resistanceIntroductionSupport and resistance are fundamental concepts related to technical analysis, whether gold, silver, or even cryptocurrencies.
Being well aware of these concepts will bring you wealth, especially in a highly volatile market such as cryptocurrency markets, as it is one of the basic principles for everyone who wants to learn to trade.
Above all, applying one of these concepts will not only make you accurate in predicting, but rather you will need to study a lot of charts. Understanding support and resistance will help you to understand more.
What are Bitcoin support and resistance levels?Think about it, as if there are limits or areas that the price cannot exceed in the normal situation, and if it exceeds, it means that a big change will happen to the price. It is almost as close to a level as you can’t afford in the normal situation.
In the case of support, the price finds "floor", while in the case of resistance it finds "ceiling."
So, in a simple concept, look for support and resistance points, and when the price exceeds it, this means that a big change will take place, but real cases are usually inaccurate or simple by this principle, because the markets are not governed by strict mathematical rules of 1 + 1 = 2.
Therefore, the most accurate concept is to think of it as a price range (zone) and not as fixed prices.
Talking is easy. Why not move on to some practical charts?
Notice that the price has continuously entered that area, but the price has not been able to descend below it and thus the price has bounced in the other direction.
The same can be repeated for resistance levels.
How to use them to predict the price?Many analysts use these levels to predict the paths of the market and because these levels are psychological and determined by market interactions in the past, they are ideal regions for large traders (or whales) to enter or exit, which means more liquidity flows to these areas.
the risk levels are higher and hence the profit is greater, it is an ideal opportunity for those who want to achieve a quick profit because when the price reaches those positions either it bounces back up or down.
If you are afraid of losing, you can place a stop loss order (OCO order.) If the area is breached, a buy or sell option is executed, thus traders can reduce their losses and exit with a small loss.
OCO order with support and resistance levelsIt is one of the options that enable you to execute a pair of orders to buy or sell at the same time. to activate the option on Binance, click on "Stop-limit order" to open a dropdown menu and select "OCO."
A practical example Let's say you just bought 2 LTC at 0.004 BTC because you think that the price is close to a support level and is supposed to rise. The problem is that you are afraid that the price will bounce and lose a lot of money.
In this case, you can use the OCO feature to place a profit order at 0.005 0 BTC along with a stop limit order at 0.0039 BTC
After that you search for the required support or resistance area and change the settings as shown in the picture.
What is support-resistance flip?This pattern occurs when a resistance or support area is broken so that when the resistance area is broken and retested, it may turn to a support level later, and vice versa.
In this type, the retest zone is ideal for anyone who wants to make a profit.
Strength of a support or resistance areaThe strength of the support or resistance area represents the number of times the retest of that point is made so that the higher the price and the retest of the support area, the more likely it will be broken and thus expect a price drop that is likely.
The higher the price price and retest the resistance area, the more likely it will be broken and thus an expected price increase is likely.
Psychological support and resistanceIt is not related to any technical analysis, but a physical explanation, which is that the human mind tries to understand things in an aggregate form so that it is easier to assimilate the information. Suppose, for example, that people love numbers like 10 15 20 25 instead of 12 17 21 28, so rounding up these numbers will give you a higher marketing opportunity.
The same applies to digital currencies, many prefer buying and selling at prices such as 9200 and 10700 and others instead of 9340 or 10670 and so on.
