Support and resistance levels in trading are the entry and exit points for trading operations. What is meant here is simply the performance of Japanese candlesticks on the charts. The support level is the lowest price the asset reaches before it rebounds higher.
On the other hand, the resistance level is the highest price the price reaches before it drops down and undergoes a correction.
Traders often use support and resistance levels to determine entry and exit points for trades.
If the trader wants to buy long, he enters from the support area.
If the trader wants to short sell, he enters at the resistance area.
Support and resistance areas are also used to set profit taking or stop loss strategies. Support and resistance levels can also be used to determine several important pieces of information. These include:
The highest price a digital currency can reach.
The lowest price a currency can fall to.
Profit/loss ratio.
price momentum
This information can be combined with technical analysis information to predict future movements, especially with moving averages, whether simple or exponential.
In digital currencies, trading support and resistance levels is one of the most important skills for making profits. This strategy can be easily used in both rising and falling markets. Let's know how this is possible.
