 What's up? What's up? What's up ladies and gentlemen? It is Bitcoin J with Bitcoin daily Coming back finally after this super long weekend guys. It was my birthday weekend plus It was a long weekend of Memorial Day over here in the States So it was pretty crazy did some traveling hit the beach hung out with friends Party, you know just a good time overall But so today I am back and we're jumping right back where we dropped off last week and we're doing some tutorials So today we are speaking about something that I've been wanting to get into and I know a lot of you have been asking about And this goes back to you know trading 101 Support and resistance guys. This is so important guys This is basically where you build your trading foundation All right support and resistance. This is where it all starts and this is where we're gonna get started today So let's jump right into it. What is support and resistance, right? So the concepts of trading levels of trading levels support and resistance are Undoubtedly two of the most highly discussed attributes of technical analysis Part of analyzing chart patterns These terms are used by traders to refer to price levels on charts that tend to act as Barriers preventing the price of an asset from getting pushed into a certain direction Now we have to go through the theory of this In order to jump into some more you know Stuff in practice, but I want you guys to understand the theory Behind it before, you know, we jump into charts and stuff. So let's continue here At first explanation and idea behind identifying these levels seem easy But as you'll find out support and resistance can come in various forms and the concept is more difficult to master than it first Appears. All right, so it's it's a pretty simple concept But it can get a little complicated a little a little iffy, you know what I mean But again Experiences is what's needed to really, you know, be able to use these properly So practice and experience guys All right, so what is support and resistance? Support is a price level where a downtrend can be expected to pause due to a concentration of demand or buying Interest as the price of assets or securities drops Demand for the shares increases thus forming the support line So basically when it gets to a certain price level Where there's a lot of support a lot of people start buying which increases the The volume Going up though, you know what I mean So that's what holds the price there and bounces it back up for example Bitcoin currently at 10,000. All right Meanwhile resistance zones arise due to selling interest when prices have increased So for example on this one is 12,000 We have been rejected by 12,000 multiple times and that's that's because every time we get to 12,000 there's a lot of selling there's a lot of sellers in that area and Volume goes up with because of the amount of new sellers coming into the market which pushes the prices back down okay Once an area or zone of support or resistance has been identified Those price levels can serve as potential entry or exit points because as Because as a price reaches a point of support or resistance it will do one of two things Okay, bounce back away from support or resistance level or Violate the price level and continue in its direction until it hits the next support or resistance level So this is an example, you know when we're at 12k We got rejected And we kept getting rejected till about 11.8 K And then we go back up to 12 K rejected to it to 11.8 K And eventually it happened so many times that one of those times when it got rejected at 12 it violated the price level of 11.8 and it dropped all the way down to 11 Okay, and then 11 was was a support and then that got violated and it dropped all the way down towards currently yet Which is at 10,000 and 10,000 is currently the support. So we're bouncing back away off the support off the 10,000 area But we keep getting dropped back down. So it's only a matter of time We would continue to not be able to break out here above Above like 10,400 10,500 error. We might be get rejected We might violate the 10,000 support and go further down so The timing of some trades is based on the belief that support and resistance zones will not be broken whether the price is halted by the support or resistance level or it breaks through trade or it breaks through Traders can bet on the direction and can quickly determine if they are correct If the price moves in the wrong direction The position can be closed at a small loss if the price moves in the right direction. However, they The move may be substantial So so yeah, this basically goes over, you know the timing of trades being able to use that support and resistance zone As an entry and exit point. Alright, so we do this a lot in our trade room We trade most all of our trades are based on support and resistance levels In conjunction with other things that we see so it is definitely the foundation of where we enter and exit trade zone The basics so most experienced traders can share stories about how certain price levels tend to Prevent traders from pushing the price of an underlying asset in a certain direction For example, assume that Jim was holding a position in Bitcoin in August And that he was expecting the value of Bitcoin to increase Jim notices that the price fails to get above 12k several times over the month Even though it has gotten very close to moving above that level in this case traders called the price level near 12,000 a level of Resistance as you can see from the chart over here Resistance level are also regarded as a ceiling because these price levels represent areas where a rally runs out of gas So this is a 12,000 area right here guys and you can see here This is over the month of August. You can see that we got rejected here We got rejected here. That's two Then we broke out above it but We instantly got rejected yet again. So that's three Then we got to reject it again the next day. That's four Then we got to reject it again. That's five. So we got to reject it five times In the span of a month at the 12,000 range. So this is a very strong resistance level right here and notice the The drop right here after that fifth rejection All right, so you see guys, I got some pictures for y'all, you know, so y'all won't get too bored You know, I don't want to just make you guys read or listen to me I want to also include some photography, you know, some real life scenarios, especially with bitcoin right now Oh more pictures. All right. Support levels are on the other side of the coin Support refers to prices on a chart that tend to act as a floor by preventing the price of an asset From being pushed downward As you can see from this chart the ability to identify a level of support can also coincide With a buying opportunity because this is generally the area where Market participants see value and start to push prices higher again. So now We showed you the resistance at 12,000 Now here's the support, right? So this is a support here where you see that the price tested this boom It bounced back up test it again bounce back up bounce back up bounce So that you can tell by seeing these all these wicks that it would drop down And there's so much buying pressure there that it would just bounce it right back up bounce it back up bounce it back up Constantly and it eventually broke out And any it kind of got stuck here by this moving average. It seems like which can also be supports and resistance Got dropped and then it bounced here again before finally just breaking out and taking off all right So trend lines it's a trend lines are another form of support and resistance As you can see it right here on this graph You see how the price just kind of respects this trend line as it nears it it gets close It bounces back up then it drops kind of respects it right here again drops respects it here again It drops over here bounces back and so forth The examples above above world to the side show a constant level Up prep show a constant level prevents an assets price from moving higher or lower The static barrier is one of the most popular forms of support resistance But the price of financial assets generally trends upward or downward So it is not uncommon to see these price barriers change over time This is why the concepts of trending and trend lines are important when learning about support and resistance When the market is trending to the upside Resistance levels are formed as the price action slows and starts to move back toward the trend line This occurs as a result of profit taking or near term Uncertainty of a particular issue or sector the resulting price action undergoes a plateau effect Or a slight drop off in stock price creating a short term top Many traders will Pay close attention to the price of a security as it falls toward the broader support of trend lines because Historically, this has been an area that has prevented the price Of the asset from moving substantially lower For example, as you can see from the chart a trend line can provide support For an asset for several days it could probably for several weeks or even several months or years All right. In this case notice how the trend line propped up the price of bitcoin for an extended period of time So this was this was over, uh, basically a month or or a couple months. I think um Where the bitcoins price just respected this trend line It would go up or go up and whenever it would drop it would just keep respecting this trend line So a good entry here Would be on these drops. So these drops this is where you want to buy Then it would tick off you wait for another drop. This is where you want to buy See if you would have been buying there you would have been making money because you would have been going up And then on this big drop buy You know, I mean the same thing buy and so so that's kind of you you you can use a ascending This would be called an ascending trend line um, and you'd be using You know zones near the trend line to as buying opportunities as entry points All right, um on the other hand So on the other side of the coin when the market is trending to the downside Traders will watch for a series of declining peaks and will attempt to connect these peaks Together with a trend line when the price approaches a trend line Most traders will watch for the asset to encounter selling pressure and may consider entering a short position Because this is an area that has pushed the price downward in the past The support resistance of an identified level where they're discovered with a trend line or through any other method Is deemed to be stronger the more times that the price has historically been unable to move beyond it So the more times it touches it the the stronger it makes it if you can't move beyond it Many technical traders will use their identified support and resistance levels to choose strategic entry and exit points because of these areas because these areas are often represent the Prices that are the most influential to an asset's direction Most traders are confident at these levels in the underlying value of the asset So the volume generally increases more than usual making it much more difficult for traders to continue driving the price higher or lower All right. Uh, now the next thing is round numbers I know you guys have heard me talk about round numbers so many times and that psychological resistance psychological support So, um, let's touch on it real quick Another common characteristic of support resistance is that an asset's price may have a difficult time moving beyond a round number Such as 10,000 or 12,000 per share Most inexperienced traders tend to buy or sell assets when the price is at a whole number Because they are more likely to feel that a stock is fairly valued at such levels Most target prices or stop orders set by either retail investors or large investment banks are placed at a round at round price levels rather than at prices such as Like 10,006, you know 10,006 dollars And that's because so so many orders are placed at the same level These round numbers tend to act as a strong price barrier If all the clients of an investment fund put in sell orders at a suggested target of for example 12,000 it would take an extreme number of purchases to absorb these cells And therefore a level of resistance would be created. We call this a psychological support resistance level All right. So so that's what I always talk to you guys about the the round numbers always pay attention to round numbers There's such huge psychological support and resistance levels That people don't not too many people pay attention to And people like to use them to enter and exit and stuff like that. So Very very very important stuff guys All right. Moving averages. This is another form of support and resistance guys Most technical traders incorporate the power of various technical indicators such as moving averages to aid in predicting future short-term momentum But these traders never fully realize the ability these tools have for identifying levels of support and resistance As you see from the chart a moving average is constantly changing is a constantly changing line that smooths out past price past price data While also allowing the trader to identify support and resistance Notice how the price of the asset finds support at the moving average when the trend is up And how it acts as resistance when the trend is down So um, so if you look at the yellow one, let's look at the yellow the yellow moving average here You'll see that that it kept touching like every time it touched it will bounce up Touch bounced up touch bounced up touched bounced up Here it did break below it and then here it kind of acted as a resistance You see here how it kind of kept getting Rejected rejected rejected finally broke out. So once that breakout occurred now a you it flipped it as a support So now it's any time of touch support support And then one more support here boom breakout Drops down Use it as support right there support support. This is all kind of just fighting fighting at that support um, but after fighting for so long it finally Violated that support and now it turns into a resistance. See how it's resistance. They got rejected over here rejected It broke now when it broke out, this is a good entry level because look how it went up. So um Moving averages are very very important guys. Um traders can use moving averages in a variety of ways such as to anticipate moves to the upside when price lines cross Above a key moving average or to exit trades when the price drops below a moving average Regardless of how the moving average is used It often creates automatic support and resistance levels Most traders will experiment with different time periods in their moving averages so that they can find the one that works best for This specific task Um, so here's uh, let's go over other indicators because there's also other indicators that can act as support and resistance Um But before we jump into the other indicators, let's go through the question of the day guys So remember every video we will have a random question about something in the video The the question will always be in a random area of the video like now Uh, find the question then find the answer in the video Post your answer in the comments for a chance to win a free months membership to our trading room Winners will be picked randomly Um once the video receives over 30 likes guys very important. We need 30 likes to do the giveaway All right. Good luck. Here it is question of the day is what is a psychological support resistance? All right. What is a psychological support resistance level? All right. Let's jump back to where we were other indicators In technical analysis many indicators have been developed to identify barriers to future price action These indicators seem complicated at first and it's often It often takes practice and experience to use them effectively regardless of an indicator's complexity However, the interpretation of the identified barrier should be consistent to those achieved through simpler methods Um, so this is one example here at the Fibonacci Uh retracement tool. Uh, this is a very popular tool Uh, for example, the Fibonacci retracement tool is a favorite among many short-term traders because it clearly identifies levels of potential support resistance The reasoning behind how this indicator calculates the various levels of support and resistance is beyond the scope of this tutorial But notice, um How the identified levels which is which are the green lines Are barriers to the short-term direction of price. So let's take a look at the Fibonacci retracement here Um, you'll see that it starts off way down here. This is where the breakout first began And it tops off at the top of its range Okay, which was 12,500 and the breakout. I cannot read it unfortunately, but I think it's around 9 000 I'm I'm thinking this is 9 000 to 12 500 um But notice how All right, it went all the way up Um, and it's respected all these numbers is this entire time especially on the way down So on the way down it bounced here, which is a 23.6 percent line Um, and before it violated it then when it went back up It got rejected at the same line So boom, here's a big rejection and then boom the 38.2 Um, it respected it and it bounced on it, right? It bounced bounce It got rejected here. Look how the selling pressure came in right here But then it broke through Only to get stuck at the 12 k resistance. Remember this is This right here is 11 700, but right here the red line Is 12 000 the red line is not part of the fib fibonacci retracement tool, but it is still a round number Resistance, so psychological resistance. We're tying two different things together right now So we broke out of that, but now we got we got rejected by that one. So that just sent us straight down uh, and we bounce look exactly where we bounce, which is a 785 area Um, and that's currently where we've been bouncing. We've been ranging between this which is 98 45 and 10400 so this is where we're currently trading in in this Little thing right here. So this is what the fibonacci retracement tool looks like. This is how you would use it So you would be looking to to enter on a on a breakout or to sell short If we fall under but you have to be careful with fake outs. Okay All right, measuring the significance of zones Remember how we use the terms floor for support and ceiling for resistance Continuing the house analogy the security can be used as a rubber ball that bounces in a room We'll hit the floor which is the support and then rebound off the ceiling Which is a resistance a ball that continues to bounce between the floor And the ceiling is similar to a trading instrument that is experiencing price consolidation between support and resistance zones now Imagine that the ball in mid-flight changes to a bowling ball This extra force if applied on the way up will push the ball through the resistance level On the way down it will push the ball through the support level either way extra force or enthusiasm for it from either the bulls or bears is needed to break through the support or resistance A previous support level will sometimes become a resistance level when the price attempts to move back up And conversely a resistance level will become a support level as the price temporarily falls back So we've spoken about this before guys Support and resistance always flip once they get violated. They flip from one to the other Um price charts allow traders and investors to visually identify Areas of support and resistance and they give clues regarding the significance of these price levels more specifically They look at number of touches So uh the more times the price tests a support or resistance area The more significant the level becomes when price keep when prices keep bouncing off a support or resistance level More buyers and sellers notice and will base trading decisions on these levels That's why the number of touches is so important. The more it touches the the weaker or the stronger it gets depends how you how you're looking at Um preceding price move support and resistance zones are likely to be more Significant when they are preceded by steep advances or declines For example a fast steep advance or uptrend will be met with more competition and Enthusiasm and may be halted by a more significant resistance level than a slow steady advance A slow advance may not attract as much attention This is a good example of how market psychology drives technical indicators Volume at certain price levels Um the more buying and selling that that occurred at a particular price level the stronger the support or resistance level is likely to be This is because traders and investors remember these price levels and are Are apt to use them again when when strong activity occurs on high volume and the price drops A lot of selling will likely occur when price returns to that level Since people are far from far more comfortable closing out a trade at the break even point rather than at a loss And time support and resistance zones become more significant if the levels have been tested regularly over an extended period of time All right guys and the bottom line final slide guys. We're almost there 25 minutes in support and resistance levels are one of the key concepts used by technical analysis And form the basis of a wide variety of technical analysis tools The basic of the basics of support and resistance consists of a support level which can be thought of as a floor under the trading prices And a resistance level which can be thought of as the ceiling Prices fall and test the support level Which will either hold and the price will bounce back up or the support will be Violated and the price will drop through the support and likely continue lower to the next support level Determining future levels of support can drastically improve the returns of a short-term investing strategy Because it gives traders an accurate picture of what price levels should prop up the price of a given security in the event of a correction Conversely for seeing a level of resistance can be advantageous because this is a price level that could potentially harm a long position Signifying an area where investors have a high willingness to sell the security as mentioned above There are several different methods to choose When looking to identify the support and resistance, but regardless of the method The interpretation remains the same It prevents the price of an under of an underlying asset from moving in a certain direction That is it guys. That is all I have for you guys today Um, I know we ran a little bit longer than we wanted to but I wanted to make sure to Cover everything and make it Cover the theory of it and then also show you guys charts on what it looks like Um, but that's basically it guys. I appreciate you guys tuning in anyone who stayed to the end. I appreciate you Uh, guys make sure to follow us make sure I like the video make sure to share it with your friends We're going to continue putting out daily videos Um, and that's basically it man. Peace and love as usual guys See you tomorrow