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Alex Cho

Trading Cryptocurrency Support and Resistance Properly

Remember, support and resistance levels aren’t perfect.

Let me explain.

There are going to be frequent cases where you purchase a coin at a support level, whether that involves a moving average, or prior support area where the coin may dip below that level even further.

Now, this is normal, yet many will complain that the coin fell even further below their well-timed entry into the coin. Why? Because, support levels aren’t set in stone, and in many cases the euphoria of markets will test a support area more severely. Below the support level there’s bound to be a lot of speculators looking to exit, as the price continues to break below the area of support, which forms a new pattern on the charts.

Unfortunately, markets aren’t binary in that a support level will automatically result in a retracement of the floor of the level. Usually, the market will test a support area multiple times, before eventually reverting above the prior support level.

When looking at historical charts, you’ll see the bottom wick of the candle stick extend below a moving average, channel, or horizontal support line all the time. And yet, beginning traders will automatically assume that the price will bounce almost immediately from the bottom support, thus resulting in immediate profits from a well-timed trade.

This is often the exception than the rule, which means that even if you’re following a set of trading rules, and there’s a well-reasoned entry for buying near or at the support level, it doesn’t mean that the support level will result in immediate profits.

I’ve bought coins near support levels on many occasions, and it usually takes several hours, or even days before the market creeps back above the prior support line.

Rule-based traders get hit by these moves, the support line breaks, so they assume they’ve made a bad entry, and close the trade.

Give it a couple more days, and the market rallies beyond the prior support area, and the trader who closed due to fear-based selling below the support line, ends up missing the big market rally that takes the price to the next resistance area that’s just marginally higher than prior resistance.

Support levels provide a general rule for when you should be buying a coin just as resistance levels provide basic guidance on where to sell your coins, but they’re not full-proof method for predicting price moves. Some leniency on these areas will help you to form better expectations around your strategy, so you don’t make ill-timed exits or entries into the market.

If you want to learn more via video courses with my help, and the help of crypto millionaires, bitcoin foundation founders, and various other crypto pioneers who are at the forefront of news, information, and methodologies you’ve got to join the Bitcoin Crypto Mastermind program.

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