Definition
Support and resistance are technical analysis concepts that describe important price levels where a crypto asset’s price tends to react. A support level is a price area where buying interest has historically been strong enough to prevent the price from falling further. A resistance level is a price area where selling interest has historically been strong enough to prevent the price from rising further. These levels are observed on price charts and are used to describe how markets often hesitate or reverse around certain prices.
Support and resistance do not guarantee that price will stop or reverse, but they highlight zones where market behavior has repeatedly changed in the past. They can form around previous highs and lows, consolidation areas, or other notable price points. In crypto markets, these concepts are applied across different timeframes, from short-term trading to longer-term analysis, and they help describe how traders interpret recurring patterns in price movement.
Context and Usage
In trading discussions, support and resistance are often referenced when describing where market participants expect increased buying or selling interest. When price approaches a support level, it is commonly viewed as an area where demand has previously absorbed selling pressure. When price approaches a resistance level, it is seen as an area where supply has previously absorbed buying pressure. These ideas are used to frame expectations about how price might behave around specific levels, without ensuring any particular outcome.
Support and resistance interact with order types and market mechanics, since clusters of Market Orders and Limit Orders can accumulate around these levels. Concentrated buying or selling interest at these prices can influence Price Impact when large orders are executed. As a concept, support and resistance provide a simple way to describe how collective trading behavior shapes recognizable zones on a price chart in crypto and other markets.