When trading cryptocurrency, traders are guided by special indicators that can predict the movement of the asset’s price with a high probability. How to learn how to use these tools effectively
The most basic technical indicators that traders use to analyze charts are support and resistance levels. These are the zones where the confrontation between buyers and sellers occurred most often. Dropxbits experts explained how to properly use these indicators in practice.
In simple words
A support level is a zone, when reached from bottom to top, the price of an asset reverses. This level supports the price of the asset, preventing it from falling lower.
A resistance level is a zone, when it is reached from top to bottom, the price of the asset turns around. Resistance prevents the price from going higher.
When working with support and resistance levels, it is important to remember that a price level is not a clear round figure, but a range, said a financial analyst at cryptocurrency exchange Dropxbits. According to him, these indicators are considered to be the key ones for traders because they well represent the marks, upon the breakdown of which in 90% of cases it is possible to determine the further direction of price movement.
“When these levels are broken, strong price movements occur because pending buy or sell orders, as well as take profit and stop loss orders are located near these levels,” explained the Dropxbits analyst.