1/ Support and resistance (SR) is crucial in trading. Especially in #crypto where technical levels are respected. This is the first thread in a series where I will break down SR. I'm starting with the simplest form of SR, psychosocial levels (PL). #cryptotrading
2/ PLs are always useful, but they're best used when a crypto breaks an ATH and you have no price data you can use for SR. $BTC is the first example.
On BTC psych levels are every 1k, starting from 70k the levels are 71, 72, 73, 74, 75, 76, 78, 79, 80, 81. You get the idea.
On BTC psych levels are every 1k, starting from 70k the levels are 71, 72, 73, 74, 75, 76, 78, 79, 80, 81. You get the idea.
3/ On smaller caps big rounded numbers can be more powerful, these are called major PLs. The smaller ones are called minors. More in examples below.
Why do these rounded numbers matter? Why is 75k important but not 75,182?
PLs are a self-fulfilling prophecy.
Why do these rounded numbers matter? Why is 75k important but not 75,182?
PLs are a self-fulfilling prophecy.
4/ PLs only work because humans are trading. If the market were completely controlled by bots, they wouldn't work. People place limit and stop orders near to big round numbers, so when the market approaches those numbers, orders trigger and price reacts.
5/ Looking at $ADA as an example. The 3.00 was a major psychological barrier. When ADA was approaching it, most people expected a pullback from 3. So, they set orders are that level. 
6/ This is an example of price breaking an ATH and PLs working well as targets for selling or for entering into a short trade.
I use PLs to predict where price will stall so I can take profit or where to buy more on a pullback.
I use PLs to predict where price will stall so I can take profit or where to buy more on a pullback.
8/ Here is an example with $GALA. Major PLs on GALA are 0.2, 0.3, 0.4 but 0.21, 0.22, 0.23, 0.24, 025, etc are minor PLs. GALA reacts at minor levels just before the major 0.3, 0.4 levels, as you see here.
9/ Plotting PLs on your charts when an ATH is broken can help determine where to set your limit orders. If you want to buy the dip a PL is often a good place to enter. If you want to take profit, a PL is often a good place to do that.
10/ This is first in a series of threads about SR. I will break down more advanced SR in my next thread. I will then link all of them together into a super SR thread.
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