I don't know if you have ever encountered the following things when you are a newbie, or if you are new to playing contracts, have you ever felt very confused by the dense candlestick charts, you don't know how to analyze the price behavior, and you don't know how to find out the price trend? If you want to learn technical analysis, you must read this article.
What is a K-line?
K charts are one of the most commonly used technical tools when analyzing price patterns. For centuries, traders and investors have used them to look for patterns that might indicate the direction of prices.
First of all, to learn technical analysis, you must first learn to read the K-line.
Simply put, a K-line describes the change in price over a period of time. Red means that the price went down during this period, while green means that it went up, and there are solid lines, i.e., the opening and closing prices, as well as the highest and lowest prices during the shadow line.
To read a K-line, take the green K as an example. Since the green K represents an upward movement, the opening price is below and the closing price is above, and the upper and lower shadows are the high and low points of the period.
What is support and resistance?
After learning how to read K-lines, we can move on to the main topic of the day, "Resistance" and "Support". "Resistance" and "Support" are two very important concepts that are used to describe the movement of a price.
Support and resistance is one of the most commonly used techniques in technical analysis, the concept of which is easy to understand but difficult to grasp. It is used to recognize price positions by the way historical prices react through reversals or at least through slowdowns, and by the fact that previous price actions at these positions leave clues to future price actions.
There are many different ways to recognize these price positions and apply them to trading. Support and resistance levels can be recognized as turning points, congested areas, or psychological levels. The longer the period, the more relevant the level.
Resistance is selling pressure on an uptrending price that prevents it from breaking a certain price level. Support is when a falling price encounters buying support, preventing it from falling below a certain price level. In the cryptocurrency contract market, understanding resistance and support is critical to determining market trends and formulating investment strategies.
Let's take a look at the principles of resistance and support:
When prices rise, investors begin to consider selling to realize a profit. As prices approach a critical price level, these investors may sell their positions, creating resistance. Similarly, when prices fall, investors will begin to consider buying in search of a lower price to enter the market. As prices approach a critical price level, these investors may begin to buy, creating support.
Additionally the concepts of resistance and support can be helpful in developing a strategy. For example, if the price has been limited by a certain resistance, consider going short at the price resistance range and stopping when the resistance is broken. Similarly, if the price has been supported by a support, consider going long at the support and stopping when it breaks down.
What is a trendline?
Trendlines are a way of determining support and resistance levels: in an up market a trendline is made up of a series of support levels, which are likely to support price when it falls back near the trendline; in a down market a trendline is made up of a series of resistance levels, which are likely to support price when it falls back near the trendline.PriceAs it rises near the trendline, resistance on the trendline will most likely cause thePriceof falling back again.
Therefore, trendlines are a common way to determine support and resistance levels in a unilateral market. Sometimes, when prices fall below a trendline, the trendline that was providing support may become a resistance level.Prices in the aftermarketResistance to the rise.
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Finally, the market does not have a set of strategies to win, resistance and support is only a part of the price trend, should not become the only reference factor for trading decisions, each transaction needs to consider not only the entry price, such as the profit and loss ratio, even if the resistance and support should also consider the loss and profit that will be faced, there is no reason to "win the grain of sugar to lose a plant," and the position and risk management, the macro and the market trend, fundamentals, and the market will not be the only reference factor. Don't be overconfident, respect the market, do the right direction the market will naturally give you incentives to think they see through the market, this is to pay tuition!
