Have you ever wondered why the price of a stock or cryptocurrency seems to always bounce back at the same levels? 🤔
It's not magic… it's Supports and Resistances.
🧱 What are they?
Imagine the price is a bouncing ball inside a house:
🔹 Support (the floor):
It's a level where the price stops falling because many buyers appear. The price "collides" with the floor... and bounces back up.
🔹 Resistance (the ceiling):
It's a level where the price stops rising because many sellers take the opportunity to lock in profits. The price "hits" the ceiling... and then falls back down.
🚀 Why are they so important?
Identifying them is like having a market map. They help you to:
✔️ Know where to buy (near the support).
✔️ Know where to sell (near the resistance).
✔️ Manage risk: if the price breaks the “floor”, you know something has changed and it’s time to rethink the trade.
🔍 How to identify them?
You don’t need complicated formulas, just observe the chart:
📌 Peaks and valleys:
Look for areas where the price has stopped and reversed two or more times. The more bounces, the stronger the level.
📌 Round numbers:
On a psychological level, round numbers ($100, $500, $1,000) often act as natural barriers.
🛠️ Types of Supports and Resistances
They are not always straight lines. The main types are:
🔹 Horizontal: the classics, at a fixed price.
🔹 Dynamic: they move over time (e.g., moving averages).
🔹 Slanted (trend lines): diagonals that accompany rises or falls.
💡 Golden tip
When a resistance is broken strongly, it often becomes a new support.
👉 The old ceiling… now is the new floor.
🎥 To dive deeper, I recommend this video by trader and YouTuber Alex Ruiz, where he explains supports and resistances clearly and practically:
🔗 https://youtu.be/0biqzA0VQNs?si=gKaqvsT6aZIspamT
👉 Did this explanation help you?
Leave me a comment and let me know if you want us to talk about the next step: how to use them to enter trades with more confidence 📊✨