General Idea of the Support Level and How to find better Support Zones according to our Technical Analysis knowledge
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Assalam-o-Alaikum Steemians !
I'm @moneyster, a professional level Cryptocurrency investor and an analyzer. As usual, today I thought to share another Crypto-related experience with you. I hope this article will be considerably beneficial for all the Steemians in this community
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Support Levels can be defined as very important zones that we should use for trading Cryptocurrencies. Because a support level is doing a significant contribution to the movement or behaviour of the Crypto Market.
As an example, we can identify the reverse point of any significant downtrend with the help of this Support Level. It means that if we are able to find a proper and suitable support zone in the chart, we can see a good bounce from this region as a good support to the price.
To identify a proper support zone, we have to focus on the historical price data according to a given chart window. It means we should focus on previous price levels that have bounced the price several times at the same zone or level. If possible, we can select a minimum of 2 points according to the explained method and we can write a Trendline or support line by connecting those points together.
Finally, we can easily extend that Trendline or Support line to the forward of the chart window and then we can use this region as a better support zone. At this time, the price movement can be bounced from the extended trendline or support line as the 3rd bounce.
Here each candle should not be closed below the drawn Support line except for candle wicks. If a candle breaks the Support line, we can think of it as a support break or the strength of the bearish pressure is very high as compared to bullish pressure.
Support Level is a better Technical Analysis method to find better Trading Opportunities in the Crypto Market. At the same time, we have the ability to use this Support Level to manage our risk at a certain level. It means if an identified support level has broken in the chart clearly, we can safely exit from the ongoing Trading position to minimize our risk at a certain level. Here we can easily take long positions by confirming proper support zones in the chart. Especially, here we have the ability to take short positions when the price breaks a major support zone properly according to the relevant confirmations.
First of all, I will open BTC/USDT chart using the TradingView platform. Then we need to find the Support Levels in the chart using the candlestick chart by comparing historical data with its lows and Lower Lows. Then, we need to draw a proper horizontal line by connecting those Lows or Lower Lows together.
Same as the Resistance zone, we can easily extend that horizontal line to the forward of the chart window to get an idea of the future market behaviour. So, the price should show a significant bounce from this highlighted zone and a proper bullish candle should be formed near this Horizontal Line. Here the next candle after the bullish candle should be another bullish candle and it should break the Upper wick of the first candle that had been trading near the support zone to take our entry. I will further demonstrate it through the BTC/USDT chart.
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In this way, we can easily use this Support Level in the chart and take more accessible trading opportunities. However, we can try to combine this strategy with some other indicators to increase the winning percentage.
At the same time, as I said in my previous article, we should remember that all the indicators and strategies are not efficient completely as nothing we can find 100% efficient in the world. So, we should depend only on these strategies and indicators to confirm our trading opportunities.
I have studied the below-sourced articles to study these topics further, and I have explained all the above facts in my own words and experience.
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Thank you very much @tucsond for your support. It means a lot to me.
Wow brother today this post very important. Really I like this post. Thanks for sharing with us.
You are most welcome my friend. It's really a pleasure to see a great comment from you. stay with me to read more related articles.
Thanks for giving us a very beautiful lecture on support...I hope to read your write up on resistance too. You have presented beautifully.
Thank you very much for your valuable feedback. I have already done an article related to resistance. I hope you will read it. Thanks again.
This is an interesting content. I learnt from it
It's a pleasure to hear this was useful to you. Stay with me to read more such interesting articles.
Using the support line is a very good way to take advantage of the market.
You are 100% correct my friend. We have the ability to use support lines wisely in the chart to trade cryptocurrencies very safely. Thanks for the valuable feedback.