Support and Resistance

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Good Morning,

Not gonna lie, writing daily can be tough.

But knowing it's been helpful?

That gives me the drive to keep going.

Yesterday, I showed you the ropes on Candlestick Charts. 

Today, we'll dive into the most underrated tools that can make you rich: Support and Resistance. 

These are key in understanding technical analysis.

But first, check out the "Stay up to date" section.

I've packed in extra details to give you a quick rundown of the news!

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Stay Up-to-Date

Save time on researching the crypto market:

💰Bitcoin

• Grayscale's Bitcoin ETF is losing cash, totaling a $15 billion hit. They're trying to fight back with a new "mini" Bitcoin ETF. Despite heavy competition, the rise in Bitcoin's price and their remaining $21.7 billion fund keeps Grayscale afloat. (link)
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• This is why the transition to a global Bitcoin economy is underway and it's unstoppable. (video)
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• The Bitcoin halving coming on April 20, 2024, will majorly shake up supply, demand, and price. But as Bitcoin nears its 21 million cap, halving will hold less weight. This event could change Bitcoin economics and rattles the mining industry. (link)
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• Bitcoin is a shield that protects you from scams, loss of the value of your time and work, and gives everyone a long-term financial strategy. (video)

🚀 Altcoins

• Google is suing two Chinese guys for creating scammy crypto apps on the Google Play store and tricking over 100,000 users worldwide.- Yunfeng Sun and Hongnam Cheung, have apparently been doing this since 2019. They made their apps look legit to fool people and even struck up "friendships" and "romantic attachments" via texts. When Google removed their apps, they just made new ones.(link)

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• Sony is Preparing to Release Stablecoin -Sony's banking division is testing a digital coin tied to real money, using the Polygon's blockchain. They're trying to cut payment costs and boost their gaming and sports sectors. (link)
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• Coinbase is gonna add Worldcoin and Ordinals perpetual futures from April 11 - Worldcoin's all about being a huge financial network, Ordinals turns stuff like text and pics into bitcooin NFT. Perpetual futures are kinda like betting on these cryptos, and they don't have an expiry. (link)

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• Solana Faces ‘Existential Moment’: Co-Founder Speaks Out - “The entire Solana thesis comes down to whether different applications can share the same chain and if composability is more important than sovereignty. For this to work, memecoin trading can’t disrupt payments, governance, depin, and all the other activities. This is an existential moment as big as the FTX collapse.” (link)

📈 Trading

• Bitcoin keeps playing out similarly to the 2020 ATH break. (link)

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• BTC price is forming a bearish pattern in a bearish channel and it aligns with the Elliott wave theory. The 58K point is pretty important 'cause it's a major low point from March, with lots of orders, so whales would go for that to buy heaps of Bitcoin. (link)

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• Educational: The "Fibonacci Retracements" tool - helps highlight possible entry and exit points within asset trends by identifying key points of support and resistance. It's based on the 'Fibonacci sequence'. The tool automatically calculates these levels for you, making trend analysis easier. (link)
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• $DROPS nearly 10M market cap, looking for an all time high (link)

Educational

Support and Resistance Explained

“Your wish is my command”

To understand resistance and support, picture this: You're out in a field, ready to test out your new ball.

You chuck that ball high up in the sky, right? As the ball goes up, it meets a point where it can't go any higher, like an invisible ceiling.

That's the resistance - it's gravity pulling back saying, "Nope, you're not getting past this, buddy!"

Now, as tough as your ball is, it's not gonna fight gravity forever. It starts falling back down.

As it's hurtling downward, there's a point where the plummet stops. The ground beneath - that, is the support.

So, on a chart, the resistance is like that invisible ceiling keeping the price from skyrocketing indefinitely.

The support, that's the ground that prevents it from free-falling.

In our story, we're dealing with the law of gravity, but in the market, it's all about the law of supply and demand (or greed and fear).

If more “folks” want something than there is of it, the price “pumps”.

But if there's loads of it and no one wants it, the price “dumps”.

When supply and demand are equally matched?

Well, prices just chill and move sideways.

What is support?

In a downtrend, prices are dropping because there's too much stuff and not enough buyers.

The further the prices drop, the more tempting they become to investors who've been waiting for a good deal.

Eventually, there are enough of these eager buyers to balance out all the surplus stuff.

The moment this happens, prices stop sliding. This is support.

Support can be a specific price or an entire zone on a chart.

It's kinda like a sweet spot showing at what price people really want to start buying.

Typically, at this support level, there'll be more people wanting to buy than there are sellers, stopping the price slide and even starting a climb up.

How to draw a support line on a chart?

To draw a support line on a chart, you simply need to draw a straight line connecting at least two Lows of a price. 

Below is a real exemple, on Bitcoin chart.

What is resistance?

Resistance is like support's flip side.

Prices climb because more people want to buy than there is stuff available.

But as prices keep going up, you'll hit a point where sellers rule the roost.

Lots of reasons for this, but basically, it shows up on a chart as the point where there's more stuff than eager buyers.

That's the resistance.

Like support, it can be at a specific price or a larger zone.

How to draw a resistance line on a chart?

To draw a resistance line on a chart, you simply need to draw a straight line connecting at least two Highs of a price. 

Below is a real exemple, on Bitcoin chart.

Why does this matter?

We can use support and resistance to guide our decisions in the market.

The more time it’s been hit, the stronger the support/resistance gets.

The stronger the support, the more dramatic the fall will be once it breaks.

As you may observe in the chart above, the support was struck four times, and on the fifth time, when the support was finally breached, the price plunged by a significant 50%.

That was a good confirmation to exist the market.

The same principle applies to the resistance:

Once the resistance was broken, it served as a confirmation that it was an opportune moment to buy.

Conclusion

If a support's been busted, it might be a good time to sell.

If a resistance's been cracked, it could be a sweet time to buy.

This events can be confirmation on what market will do next.

Just remember, don't throw all your savings in without testing the waters first.

Now go make your own research,

Mr GoBrr

Meme Of the Day

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.