Quick Guide to Understanding Support and Resistance

Hello dear @TradingView community!

Have you ever heard of the concept of "support and resistance" in trading? It's actually one of the most widely used concepts in trading! However, it's interesting to note that everyone seems to have their own idea of how to measure support and resistance.


So, let's go back to basics. Imagine a zigzag pattern that's moving up - this is known as a "bull market." When the price moves up and then pulls back, the highest point reached before it pulled back becomes resistance. Resistance levels indicate where there will be a surplus of sellers.


On the other hand, when the price continues up again, the lowest point reached before it started back is now support. Support levels indicate where there will be a surplus of buyers. In this way, resistance and support are continually formed as the price moves up and down over time.


You might be wondering how to actually trade using support and resistance. One way is to "trade the bounce" - meaning to buy when the price falls towards support, and sell when the price rises towards resistance. Another way is to "trade the break" - buy when the price breaks up through resistance, and sell when the price breaks down through support.

But how do you know when support and resistance levels have actually been broken? It's important to note that support and resistance levels are not exact numbers. Often times, you will see a support or resistance level that appears broken, but soon after find out that the market was just testing it.


To filter out false breakouts, it's helpful to think of support and resistance more as "zones" rather than concrete numbers. One way to find these zones is to plot support and resistance on a line chart rather than a candlestick chart. This helps you focus on intentional movements of the market rather than its reflexes.


There are also some interesting tidbits about support and resistance - for example, when the price passes through resistance, that resistance could potentially become support.


And the more often price tests a level of resistance or support without breaking it, the stronger the area of resistance or support becomes.


So there you have it - a quick and easy guide to understanding support and resistance in crypto trading!