Everything about resistance and support levels in cryptocurrency space

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Resistance consists of a level in which the price of an asset fails to break through because of strong selling pressure. In some cases, the occurrence of resistance levels can be related to big sell walls, that prevent the price from rising more. Resistance and support levels are really important when analyzing the bitcoin and other cryptocurrency space.
So a resistance level is expected to act as a “ceiling,” caused by a large supply of sellers in that price area. As such, traders can interpret resistance as a level that can only be surpassed with significant buying pressure.
Typically, technical analysts draw resistance lines based on previous highs. Such a technique can be useful when trying to predict potential points of price reversal. Generally, resistance levels are depicted as straight horizontal lines, but they may also be drawn as diagonals. However, diagonals are often referred to as trend lines.
It is important to remember that when a resistance level is surpassed, tend to become a support level – which is basically has the opposite meaning. While resistance lines often act as a ceiling, preventing the price from rising further, support levels act as a “floor” that tends to hold the price above it. Typically, great trading opportunities can arise when resistance or support levels are broken.
To conclude, resistance levels can be a key tool in technical analysis, along with support levels, which are the point at which traders are unwilling to let an asset’s price drop much lower. Traders will often identify areas of support and resistance in order to make decisions on trades, including the positioning of stops and limits. The overwhelming supply created at these levels may effectively become a self-fulfilling prophecy around price points.
The rapid increase in demand, as well as a decrease in supply, will cause a spike in the price, which is known as a ‘break out’. If an asset does breach its resistance level, then some traders believe it will go on rising in price, or ‘rally’, until a new resistance level is found. At this point, it is common for the resistance level to become the new support level.

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