How to trade the "Near Support/Resistance" alert

Image 1: ZRXBTC [15m] - Near Support

1. Requirements

1.1 Price getting near support or resistance

In Technical Analysis, support and resistance levels are referred to price levels (or zones/area's) on a chart where price is expected to pause before further up- or down movement, or even reverse direction.

Support- and resistance levels are meant to be entry- or exit points within trades, as price is expected to bounce from these levels. When price breaks the support- or resistance level, continuation is expected until price encounters the next support- or resistance level.

Support- and resistance levels occur on all time frames, where higher time frame levels are supposed to hold more value than low time frame levels. Support- and resistance levels are commonly identified in a chart as trendlines, (boxed) zones and/or moving averages. Support- and resistance area's can be identified e.g. based on price history as area's where price commonly spends more time before continuation, where prices bounces away from, or even where trend direction reverses.

In trading "first test, best test" is an unwritten rule. The more an area has been tested, the more likely to pierce through it.

1.2 Buy/Sell pressure

When buying support, you'd like to see buy pressure which ultimately leads to a bounce of support.

In case of nearing resistance (a level to keep an eye on for selling) the opposite is true. When there's a lot of sell pressure you'd be looking to sell.

1.3 Reversal Candlestick (formations)

Buy pressure at support levels lead to bullish candlesticks/candlestick formations. You'll see candles with wicks at the bottom of the body. Examples of bullish reversal candlesticks/candlestick formations are: bullish pinbar/hammer, morning star, bullish engulfing etc.

Sell pressure at resistance levels lead to bearish candlesticks/candlestick formations. You'll see candles with wicks above the body. Examples of bearish candlesticks/candlestick formations are: bearish pinbar/(inverted)hammer, evening star, bearish engulfing etc.

2. Example

Image 2: ZRXBTC [15m] - Near Support - Checklist

2.1 Checklist

✅ In this example we received an alert by the CryptoCoinScanner of a Near Support
✅ Price history tells us that this level has proven to be support and might as well be this time
✅ Wait for confirmation (buy pressure) and corresponding candlesticks/candlestick formations

Important: Don't buy yet!

2.2 Buy when support is confirmed

Wait until the support level proves to be support. On the shorter time frame would want to see confirmation that this level holds (for a 4H alert you could e.g. use the 30 min or 1H time frame).
It is important that candles closes remain above the support level. A wick through the support level is allowed.
If the support level holds and corresponding candlestick formations appear, you could take position. Always make sure you place a SL in order to secure your capital in case support fails.

Image 3: ZRXBTC [5m] - Near Support - Buy

2.3 Result

Image 4: ZRXBTC - Near Support - Result

🚀 🏆 In this example we made more than 20% profit

Happy trading

CryptoCoinScanner Team