Technical analysis is one of the most popular strategies to spot chances in the field of cryptocurrency trading. Using a variety of indicators and charting patterns, this is the analysis and general breakdown of charts. The Support and Resistance Strategy is one such method.
Support
The lower horizontal line holding up price at a particular level is referred to as a support, sometimes known as a floor. By placing a line where you think the price reaches but rarely descends, you can locate a floor. Because they have witnessed the markets rise each time a price reaches that level, some traders employ the straightforward method of purchasing at the floor.
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| Support Level -- ETH/USD |
Resistance
A resistance, on the other hand, is the ceiling and the opposite of the floor (upper horizontal line). Prices revert to heading in the direction of the floor when the market reaches a ceiling. When they notice that the price has reached a resistance, traders occasionally sell.
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| Resistance Level -- ETH/USD |
Breakout
Finally, traders look for breakout possibilities using these lines. Support and resistance are used to predict the point at which price breaks out of consolidation during a breakout. Traders typically look to buy when the markets break through the resistance. Markets look to sell as they rise off the floor. This tactic indicates a change in price momentum in the direction of the breakout.
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| Breakout -- ETH/USD |
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