Quick Guide to Finding Bitcoin Support And Resistance

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Finding Bitcoin Support and Resistance is an important task for improving your entries and exits while day trading. You can easily make fortune with leverage trading if you learn the art of identifying key bitcoin support and resistance areas.

Bitcoin Support And Resistance

Bitcoin Support and resistance levels can usually be identified by looking at the price history and spotting the key areas where price reacted by reversing, rising or falling sharply. Rather than being an exact number, resistance and support exist as levels of approximately +-5% of a particular price which can be more efficiently determined by looking at the volume and other factors. If a price level has been touched multiple times but hasn’t been broken through, it is a strong identifier of being a key support or resistance.

When the price of bitcoin is falling, a support level can be identified by looking at the price history as the level from where the price rose sharply in the past. Similarly, when bitcoin price is rising, a resistance level can be identified by looking at the price history by looking for the level from where bitcoin price dropped sharply. After a support level has been broken, it acts as a resistance in the future. Similarly, a broken resistance level acts as a support level for the future.

Identifying if a support level or a resistance level has been broken is a tough task. Usually once a support or resistance level has been reached and the volume starts falling, its a sign that the levels are holding and you might see a reversal soon. If a support or resistance level has been hit multiple times in a quick period, it might be getting weaker and break soon. If a support or resistance level has been hit multiple times but in longer time frames, the levels will be difficult to break through.

Plotting Bitcoin Support And Resistance on Charts

There are various open source scripts available on the internet to quickly mark support and resistances on charts. If you are using tradingview.com for charting, you can use the most basic script provided by Justin. However, it is recommended to plot these levels manually. Tradingview.com has a nice set of tools for easily plotting key levels on bitcoin charts which can be saved for future use.

Making Money Via Leverage Trading

While it is incredibly risky, you can start making good money by trading at key support and resistance levels. Bitmex is a place where traders usually take advantage of supports and resistances to make money. If you know that there is a strong resistance where the price is heading, you can initiate a short and make money if the price reverses. If the price is falling and you know there is a strong support nearby, you can setup a long and wait for the price to bounce. This is incredibly risky which is why we recommend you use the bitmex testnet website for learning.

Conclusion

While, it is a easy task to identify these levels, it is still a tough task to identify if a support or resistance is going to be broken. Let us know how you identify when a support or resistance level is going to be broken.

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Shivam Chawla

Following CryptoCurrencies since 2013. If you like my articles, follow me at http://twitter.com/shivamchawla243

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