Cryptocurrencies both Bitcoin and Altcoins have gained immense popularity in recent times. With the Market Capitalization standing close to 1.7 Trillion Dollars, investing in cryptocurrency has become as valuable as investing in any Big-Tech like Apple, Google, or Facebook. As more traders join the cryptocurrency industry, they look to grasp concepts that can help them analyze the prices of cryptocurrency. One such trading concept is Support and Resistance.
Among other things, Support and Resistance are technical indicators that can be used to analyze price movement and make buying or selling decisions at certain price points.
Support is a price level in the trading chart beyond which asset prices cannot fall or decline. As the support level restricts any downward price movements, traders get the incentive to purchase and sellers deter from selling their cryptos. This pushes demand for cryptos higher and causes prices to move upwards.
Resistance is a price level in the trading chart that rejects any upwards movement in price which prompts traders to take a short position which eventually pushes the price downwards.
To sum it up, traders can utilize support and resistance indicators to make buying and selling decisions when trading cryptos. As cryptos are known for being volatile, these indicators can enable traders to make logical and strategic buy and sell decisions. They are also ideal to identify critical entry and exit points and manage their risks.
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