Support and resistance as technical analysis in cryptocurrency trading (Analysis)
It is important to be aware that understanding the basic concepts of support and resistance only gives us an estimate to be able to predict key levels in price movements.
Within the generalized spectrum of trading these basic concepts of support and resistance are representative to indicate to us the behavior that can take the price of an asset, it is of tremendous importance, since from their knowledge we can discern between the various time intervals in which an asset can sustain its price despite the fact that it is lowering its price. Also of importance is the fact that when an asset says it is going to escalate in price, we can know up to what point it can go up, and this can be predicted by finding the level of resistance, knowing that if it reaches that level of resistance, it is because it will not be able to break that level to escalate to higher prices.
Being able to conceptualize about these indicators allows us to analyze as potential traders in the purchase and sale of digital assets if we can really take into consideration certain estimated values to buy at the supports and sell at the resistances.
It is important to take these values as a reference, as they may vary, however they are certainly reference values that can help us a lot at the time of being able to make a transcendental decision based on the investments we have in digital assets such as cryptocurrencies, I make reference to this, since in some cases support or resistance zones can be reached and then the price of the asset gives a pause to try to stabilize, it is at that point where there may be the possibility that it can change trend, otherwise if the price breaks with any of the support or resistance lines, this when it happens is because it will follow the same trend but with greater depth, ie if it breaks the support barrier is because it will lower the price with greater force, and if it breaks the resistance is because it will continue the bullish run with greater firmness.
If there is no safe zone to buy and sell then what strategy can be applied?
Logically the concepts of support and resistance are indicators that function as a tool in technical analysis that gives an indication but it is not everything to make a decision to buy or sell a digital asset such as a cryptocurrency, therefore we must use it as a knowledge that guides us, therefore if we have a part of our stable and volatile cryptocurrencies, simply if we are going to buy, we use only a small part of our stable cryptocurrencies to buy other cryptocurrencies of our preference, this with the intention that if what the support line indicates is not fulfilled, then we have a part available to make another analysis and to be able to buy.
The same applies to the reverse case, as we are not sure that a resistance line will not be broken in its entirety, it is advisable to sell a part but not all of our volatile cryptocurrencies, and leave a part in case the resistance line is broken to sell a part higher.
In conclusion I say that the world of trading should be handled with caution and a psychology according to the control of emotions, therefore the use of technical indicators are very helpful only if used as a guide element, taking into consideration that its variation is latent and can occur depending on the case of market sentiment, if we consider that the indicators of support and resistance is a help but it is not everything to conclude in a purchase or sale entry, then we will have the tools according to how to succeed and have sustainable gains over time.