Support and resistance

Support is a price zone where demand has been strong enough to halt declines, and resistance a zone where selling has capped rallies. Traders identify them from previous highs and lows, round numbers, moving averages and areas of heavy trading volume. They are better treated as bands than as exact prices.

Market commentary on bitcoin often frames moves around these levels, such as a key support that must hold or a resistance that needs to break. When resistance is broken convincingly it often turns into support, and the reverse happens when support fails. Many traders place buy orders near support, sell orders near resistance and stop-loss orders just beyond them.

These levels work partly because many people watch the same ones, which also makes them crowded: clustered stops attract sharp wicks that briefly break a level before the price returns. No level is guaranteed to hold, and its relevance fades as market conditions change.