Plotting Support and Resistance | Cryptocurrency Trading

A support level is a level where the price tends to find support as it falls. This means that the price is more likely to “bounce” off this level rather than break through it. However, once the price has breached this level, by an amount exceeding some noise, it is likely to continue falling until meeting another support level.

A resistance level is the opposite of a support level. It is where the price tends to find resistance as it rises. Again, this means that the price is more likely to “bounce” off this level rather than break through it. However, once the price has breached this level, by an amount exceeding some noise, it is likely to continue rising until meeting another resistance level.

Round Numbers
Round numbers tend to be important support and resistance levels due to their psychological importance.

Role Reversal
A trendline doesn’t cease to be an important area of support or resistance when it’s broken; rather, it’s role is simply reversed. If a price breaks out from a resistance trendline, the trendline becomes a support level moving forward. The only catch is that the reversal needs to be a true reversal rather than a false breakout or breakdown, which generally means that it’s accompanied by significant volume and a price spike.

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Disclaimer: I’m not a financial advisor, and nothing I say is meant to be a recommendation to buy or sell any financial instrument. Don’t invest money you can’t afford to lose.

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Plotting Support and Resistance | Cryptocurrency Trading

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Kane Dane