Crypto Trading 101: An Introduction to Support and Resistance

In trading, there are similar barriers that limit the movement of price action known as support and resistance.

The most important and easiest to identify support and resistance levels take the shape of horizontal lines as a result a trend being rejected repeatedly at a very similar price point.

In the upper frame of above chart, sellers of XMR/BTC continually push down price from the 0.00451/BTC area, establishing it as strong resistance.

In lower the frame, buyers continually held up the price of XLM/USD at $0.17 fortifying it as strong support.

Conversely, when the buying pressure behind a support level is fully absorbed, it will turn to a resistance level given traders are no longer interested in buying at this price.

Conversely, surpassing resistance is bullish in nature and price tends to follow the breakout until its next resistance level is identified.

The above chart depicts the effect polarity had on the price of XMR/USD once its resistance level of 0.00451/BTC was broken.

Price rose emphatically once the resistance was breached due to the large shift in market sentiment that was taking place.

Even after prices action cooled off, it fell to the prior resistance left, but this time it held as support - the essence of polarity.

Price trends are expected to take a breather when coming in contact support or resistance lines due to the concentration of buying or selling pressure that awaits.