Follow the explanation of support and resistance
A very important idea
Sometimes after a breakout:
The old resistance becomes support, and sometimes after a break:
The old support becomes resistance
Example
If 0.36 is resistance, then the price breaks through it and later the area makes it bounce upward again, then it may become: 0.36 new support
Why are support and resistance important?
Because they help you understand:
Where buyers are concentrated
Where sellers are concentrated
Where the price may calm down
Where movement may increase
But very important: support and resistance are not guarantees; they are areas traders watch to understand the possible behavior of the price.
How to use them simply?
When looking at any coin, ask:
What is the nearest area the price previously bounced from? → possible support
What is the nearest area where the price previously failed? → possible resistance
Is the price near support or resistance?
Is there strong trading volume at this area?
A very simple daily example
Imagine a ball in a room:
The floor prevents it from going down further = support
The ceiling prevents it from going up further = resistance
If the floor breaks, the ball drops downward.
If the ceiling opens, the ball rises upward
$ALLO
A very important idea
Sometimes after a breakout:
The old resistance becomes support, and sometimes after a break:
The old support becomes resistance
Example
If 0.36 is resistance, then the price breaks through it and later the area makes it bounce upward again, then it may become: 0.36 new support
Why are support and resistance important?
Because they help you understand:
Where buyers are concentrated
Where sellers are concentrated
Where the price may calm down
Where movement may increase
But very important: support and resistance are not guarantees; they are areas traders watch to understand the possible behavior of the price.
How to use them simply?
When looking at any coin, ask:
What is the nearest area the price previously bounced from? → possible support
What is the nearest area where the price previously failed? → possible resistance
Is the price near support or resistance?
Is there strong trading volume at this area?
A very simple daily example
Imagine a ball in a room:
The floor prevents it from going down further = support
The ceiling prevents it from going up further = resistance
If the floor breaks, the ball drops downward.
If the ceiling opens, the ball rises upward
$ALLO