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Whether it’s crypto, forex or other regulated markets, traders of all experience levels need to master the art of accurate support and resistance.

While it’s a simple concept and technique to apply, support and resistance is the foundation of any kick-ass trading strategy. That’s why in this episode of our ultimate trading series, we show how to master the art of S&R.

Let’s dive in.. but before you do. Do you want loads of free beginner material, podcasts and all of our favourite free trading tools we personally use and recommend? Join us on discord

Support & Resistance

What the heck is it?

One of THE most widely used trading strategies in any market is surely support and resistance. From beginners to even the most advanced traders, support and resistance is a fundamental technique that 99% of traders implement when scanning the markets. Just because it seems simple, it doesn’t mean that it’s not effective, so don’t ever overlook the basics when starting your trading journey. 

In the simplest sense, Support and Resistance is:

  • When price tops out at a point (resistance) where the price can no longer go upwards and it starts trending down and “pulls back”.
  • Once the price starts trending down and before it starts trending back up again, it hits a point of (Support) where the price is held up from going any lower and “bounces” to push back again to continue the trend.

Think of support and resistance like walls or barriers, that stop pricing going in a certain direction and once these walls have been identified it provides us traders with potential areas to exit the market (at resistance) or re-enter in the hopes that price will return to an upward trend (support)

Identifying Levels of Support

When looking for levels of support, look to find them at the bottom of a downtrend once it has come to a stop and buyers are looking to re-enter the market and push the price of your coin higher

Once price has fallen and begins to get the attention of traders, increasing buying demand and volume causes the falling price to “bounce” and begin trending upwards.

Once these levels of support have been identified, they provide us with valuable information on whether to jump on the bandwagon and ride the gains, or wait to see if the area of support and amount of buyers was significant enough to start pushing price higher. Or, if it was just a temporary, but failed attempt from the buyers to hold up price, before we continue going down to the next significant level of support.

This is why we wait for stronger confirmations of trend before buying into areas of support..
(More on that below)

Identifying Levels of Resistance

The opposite of support is of course… resistance. This occurs at the end of an uptrend where the the formally bullish  trend upwards was stopped at a point where it was unable to continue pushing higher.

You’ll usually find that in the past, that same level of resistance occurred, which also stopped the price from going higher, which would have given us an indication that it was time to exit our positions.

When resistance occurs, this tells us that the bulls have lost control and buying volume is drying up and if we fail to break through resistance and continue the upward trend, the sellers (bears) are in control of the market. 

S&R Is Not Always Exact Though…

While support and resistance is an accurate way to predict where price may be held up or pushed down after looking at previous data… it is not always exact, but it is often close.
(Particularly in crypto on lower alt cap coins due to the liquidity aka, market cap)

Sometimes we will see a previous support or resistance where a wick, or the candle body itself
will appear to be moving across the line of resistance and we think things are heading upwards,
before trending back down as the resistance was too strong, or visa versa with support. 

Why it’s important to wait for confirmation…

To help you better understand support and resistance, think of them as zones, or areas of interest, rather than definite levels where price MUST reverse. Meaning that when price starts nearing a level of support or resistance, pay attention, but don’t automatically assume it’s time for a reversal.

Savvy traders will wait until 1-2 proceeding candles have closed above or below those areas to give confirmation that trend is continuing, or reversing to the upside. As we can see below, there was strong bullish engulfing candle that broke above a previous level of resistance after that previous downtrend, buy swiftly continued on close to previous all time lows (ATL)

Don’t Forget About Volume

One thing we see a LOT is traders that forget to take buying/selling volume into consideration when looking to enter or exit a trade. For example, if we see price heading towards a previous level of resistance, how can we tall that there are enough buyers in the market to push the price through resistance and continue the uptrend if we don’t pay attention to how many people are buying?

No volume = Very unlikely that we break resistance (in most cases)

Support and Resistance “Flip”

Just as a sounds, when a point that was previously resistance, becomes a level of support, a support/resistance flip has occurred, as per the image below. It’s also a confirmation that we are now more bullish and prices may start to trend upwards.. 

Bonus Tips:

  • When the price passes through resistance, that resistance could potentially become support.
  • The more often price tests a level of resistance or support without breaking it, the stronger the area of resistance or support is.
  • When a support or resistance level breaks, the strength of the follow-through move depends on how strongly the broken support or resistance had been holding.

Thanks for Reading!

As week two comes to a close, your confidence is no doubt beginner to increase as we start to understand the basics of a solid beginner trading strategy. 

Next week, we take a look at the final piece of our beginner trading puzzle before we start diving into more advanced techniques and strategies! 

Download Direct From Our Discord Channel

Join Our Dedicated Beginner Community

Ask questions and get answers from team Unity and our trading OG’s inside our dedicated beginner trader discord channel, with LOADS of bonus beginner trading content & more!

TODAY’S TOPIC

PT 2 -Support & Resitsance

Welcome to session 2 of the UTG Beginner Crypto Trader Series where we dive into Support & Resistance.

YOU’LL LEARN

  • What is support and resistance?
  • How to identify support
  • How to identify resistance
  • Support & resistance “Flip”
  • Plus Bonus Tips

RESOURCES

TODAY’S TOPIC

Support & Resistance

Welcome to session 2 of the UTG Beginner Crypto Trader Series where we dive into Support & Resistance.

YOU’LL LEARN

  • What is support and resistance?
  • How to identify support
  • How to identify resistance
  • Support & resistance “Flip”
  • Plus Bonus Tips

RESOURCES

Whether it’s crypto, forex or other regulated markets, traders of all experience levels need to master the art of accurate support and resistance. 

While it’s a simple concept and technique to apply, support and resistance is the foundation of any kick-ass trading strategy. That’s why in this episode of our ultimate trading series, we show how to master the art of S&R.

Let’s dive in.. but before you do. Do you want loads of free beginner material, podcasts and all of our favourite free trading tools we personally use and recommend? Join us on discord

Part 2 – Support and Resistance

What is Heck is it?

One of THE most widely used trading strategies in any market is surely support and resistance. From beginners to even the most advanced traders, support and resistance is a fundamental technique that 99% of traders implement when scanning the markets. Just because it seems simple, it doesn’t mean that it’s not effective, so don’t ever overlook the basics when starting your trading journey. 

Put Simple, Support and Resistance is: 

  • When price tops out at a point (resistance) where the price can no longer go upwards and it starts trending down and “pulls back”.
  • Once the price starts trending down and before it starts trending back up again, it hits a point of (Support) where the price is held up from going any lower and “bounces” to push back again to continue the trend.

Think of support and resistance like walls or barriers, that stop pricing going in a certain direction and once these walls have been identified it provides us traders with potential areas to exit the market (at resistance) or re-enter in the hopes that price will return to an upward trend (support)

Finding Support

When looking for levels of support, look to find them at the bottom of a downtrend once it has come to a stop and buyers are looking to re-enter the market and push the price of your coin higher

Once price has fallen and begins to get the attention of traders, increasing buying demand and volume causes the falling price to “bounce” and begin trending upwards.

Once these levels of support have been identified, they provide us with valuable information on whether to jump on the bandwagon and ride the gains, or wait to see if the area of support and amount of buyers was significant enough to start pushing price higher.

Or, if it was just a temporary, but failed attempt from the buyers to hold up price, before we continue going down to the next significant level of support.

This is why we wait for stronger confirmations of trend before buying into areas of support..
(More on that below)

Click to open bigger version of images

Finding Resistance

The opposite of support is of course… resistance. This occurs at the end of an uptrend where the the formally bullish  trend upwards was stopped at a point where it was unable to continue pushing higher.

You’ll usually find that in the past, that same level of resistance occurred, which also stopped the price from going higher, which would have given us an indication that it was time to exit our positions.

When resistance occurs, this tells us that the bulls have lost control and buying volume is drying up and if we fail to break through resistance and continue the upward trend, the sellers (bears) are in control of the market. 

S&R Is Not Always Exact…

While support and resistance is an accurate way to predict where price may be held up or pushed down after looking at previous data… it is not always exact, but it is often close.
(Particularly in crypto on lower alt cap coins due to the liquidity aka, market cap)

Sometimes we will see a previous support or resistance where a wick, or the candle body itself
will appear to be moving across the line of resistance and we think things are heading upwards,
before trending back down as the resistance was too strong, or visa versa with support. 

Wait for confirmation…

To help you better understand support and resistance, think of them as zones, or areas of interest, rather than definite levels where price MUST reverse. Meaning that when price starts nearing a level of support or resistance, pay attention, but don’t automatically assume it’s time for a reversal.

Savvy traders will wait until 1-2 proceeding candles have closed above or below those areas to give confirmation that trend is continuing, or reversing to the upside.

As we can see below, there was strong bullish engulfing candle that broke above a previous level of resistance after that previous downtrend, buy swiftly continued on close to previous all time lows (ATL)

Don’t Forget About Volume!

One thing we see a LOT is traders that forget to take buying/selling volume into consideration when looking to enter or exit a trade.

For example, if we see price heading towards a previous level of resistance, how can we tall that there are enough buyers in the market to push the price through resistance and continue the uptrend if we don’t pay attention to how many people are buying?

No volume = Very unlikely that we break resistance (in most cases)

Support/Resistance Flip

Just as a sounds, when a point that was previously resistance, becomes a level of support, a support/resistance flip has occurred, as per the image below. It’s also a confirmation that we are now more bullish and prices may start to trend upwards.. 

Bonus Tips:

  • When the price passes through resistance, that resistance could potentially become support
  • The more often price tests a level of resistance or support without breaking it, the stronger the area of resistance or support is.
  • When a support or resistance level breaks, the strength of the follow-through move depends on how strongly the broken support or resistance had been holding.

Thanks for Reading!

As week two comes to a close, your confidence is no doubt beginning to increase as we start to understand the basics of a solid beginner trading strategy.

Next week, we take a look at the final piece of our beginner trading puzzle before we start diving into more advanced techniques and strategies!

Available From Our Disord Only

Join Our Dedicated Beginner Channel in Discord

Ask questions and get answers from team Unity and our trading OG’s inside our dedicated beginner trader discord channel, with LOADS of bonus beginner trading content & more!

Join Our Dedicated Beginner Trader Discord

Ask questions and get answers from team Unity and trading OG’s inside our dedicated beginner trader discord channel, with LOADS of bonus trading content & videos.

* 2018 Unity Trading Group PTY LTD. The information on this website has been created by Unity Trading Group (ABN: 630163343) for general information and educational purposes only and is not to be constructed as personal or financial advice. All forms of trading carry a high level of risk, and may not be suitable for all investors. Before deciding to trade any market reported on by Unity Trading Group you should carefully consider your objectives, financial situation, needs, and level of experience. By trading, you could sustain a loss in excess of your deposited funds. Before trading ASX/FX/Cryptocurrency markets you should be aware of all the risks associated with trading. Unity Trading Group recommends you seek advice from a separate financial advisor before making any decisions based on the general information given on this website or affiliated platforms.

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