#加密市场反弹 Why do support and resistance appear?

In cryptocurrency trading, the concepts of support and resistance are core elements in technical analysis. They reflect the behavior of prices within a specific range and help traders predict price movements.

1. Support level:

A support level is a lower level that prices encounter when they are falling. At this level, buyers tend to think that the price of an asset is cheap enough, so they buy in large quantities, causing the downward trend to stop or rebound.

For example: If the price of $BTC stops falling and rebounds near a certain price several times, this price is the support level. The support level is like a "floor" that the price is not easy to break.

2. Resistance level:

A resistance level is a higher level that prices encounter when they are rising. At this level, sellers think that the price of an asset is high enough and start selling in large quantities, thereby suppressing the price from continuing to rise.

For example: If the price of $BTC tries to break through several times within a certain range but fails, that price is the resistance level. Resistance levels are like a "ceiling" that prices have a hard time breaking through.

Why do support and resistance occur?

- Psychological effects: Support and resistance often come from the psychology of market participants. For example, many traders may set buy or sell orders at a certain price level, and when the price approaches these levels, a large number of orders are automatically triggered, causing the price to reverse or stop.

- Historical price behavior: Past price ranges are a reference for future prices. If a certain price level has been support or resistance many times, traders will pay attention to these prices and set trading strategies based on them.

- Supply and demand relationship: When there are more buyers than sellers in the market, the price will be supported; when there are more sellers than buyers, the price will encounter resistance. This is a typical manifestation of the balance of supply and demand determining the price.

- Technical analysis tools: Tools such as trend lines, moving averages, and Fibonacci retracements can help identify areas of support and resistance. Traders use these tools to predict the resistance or support that prices may encounter in the future.