Technical analysis training; Support and Resistance – Section 5
Technical analysis training; Support and Resistance : The concept of Support and Resistance in technical analysis is one of the basic principles that every trader should be fully acquainted with. You may have heard words like Bulls, Bears, or the constant struggle between buyers and sellers, whose front lines of battle are on the lines of support and resistance.
Supports, displayed in the form of lines or ranges, actually identify areas where the traded asset is in high demand and there are no sellers at prices below the support levels. Also in resistance lines or ranges, the market is saturated with the supply of traded assets and the so-called buyers’ order is lower than the resistance. The following chart, which is related to Bitcoin, shows the support and resistance ranges:
Support and Resistance
This chart shows the price changes of Bitcoin in 2015. The $ 298 to $ 315 range in 2015 was a strong resistance range for Bitcoin; Bitcoin tried several times to cross this range this year and failed. Also in the same year, the $ 214 to $ 220 range for Bitcoin played a significant support range, as the price was volatile after the break and there was strong demand for it.
After breaking the resistance zone on October 30, 2015, the price of Bitcoin stabilized on the resistance range and the large yellow range, which had played a resistance role for Bitcoin for a period of 10 months, became a new support range and the price fell. In November 2015, it was below this range. After breaking the main resistance range, the long-term uptrend of bitcoin began. As mentioned in the previous sections, traders usually consider the closing price of each candlestick and determine the support and resistance levels according to this price and confirm the support and resistance failure.
Support and Resistance
In this chart, you can see the trend line of the ICX / BTC currency pair, which lasted from late April to August 2018. The icon has tried several times to break the downtrend line, but each time failed. Until it broke the downtrend in late August, after which it experienced relatively significant growth for the next few weeks.
This chart shows LightQueen from late June to early August 2018. The support formed in early August broke and caused LightQueen to leave the medium-term uptrend. Then, after the pullback to the uptrend line, Light Coin will be in the downtrend. Pull Back: The last time the price returns to these lines after breaking the support and resistance lines and continues its new trend after failing to break it again.
The channels are composed of parallel support and resistance trend lines that specify price fluctuations in certain ranges. The top trend line shows a set of ceilings and the bottom trend line shows a set of interconnected floors. Channels are divided into three categories: ascending, descending and neutral.
Exiting price channels in ascending channels occurs as follows. The same thing happens with descending channels in exactly the same way and in the opposite direction. The use of support and authority lines in logarithmic diagrams is also common. Take the Ethereum chart for the last few years, for example.
The long-term support and resistance lines of the Ethereum (ETH) and the dollar (USD) are well visible in logarithmic mode. Ethereum broke out of its long-term uptrend channel in August 2018 after losing support. By identifying trend lines and support and resistance levels, one can estimate the maximum or minimum price for the future and identify possible points for the completion of the previous trend and the beginning of a new trend.