Mastering HORIZONTAL SUPPORT and

RESISTANCE for Trading Bitcoin.

By EmperorBTC
Compiled by EmperorBTC
Twitter- https://twitter.com/EmperorBTC
Telegram Channel- https://t.me/EmperorbtcTA
Personal Telegram- https://t.me/EmperorBTC
Email- emperorbtc90@gmail.com

This is the most comprehensive real-world guide to Support and

Resistance. With real world examples from Bitcoin price movements.

This is everything that you need to master it.

It’s an exhaustive guide, don’t read, STUDY IT.

Introduction.

S/R must be the most under-rated tool in trading which isn't given enough time
or attention by most beginners.

Many successful traders personally known to me rely solely on S/R. This should
speak enough for its importance.

Focus of Study.
1. Understanding Support and Resistance
2. Identifying and drawing a valid Support and Resistance line
3. Nature of Support and Resistance when it Breaks
4. Fake Breakout/Breakdown
5. Identifying entry/exit at Support and Resistance lines
6. How institutional traders stop out retail traders. (Stop loss hunting)
7. High probability entry/exit
Figure 1. Showcasing support and resistance during a downtrend

Support and Resistance can be categorized as

1. An area of supply/demand which acts as a probable zone for entry and exit.
2. Trending support and resistance (Trend-lines)
3. Horizontal lines denoting a price of either support of resistance. We will be studying these
horizontal lines in this module.
Figure 2. Illustration of a horizontal resistance line

Figure 3 Illustration of a horizontal support line

Definition.

A support line indicates a price where the buying pressure is more than the selling pressure,
acting as a base for an upward bounce of price.
To elaborate, the demand is greater than the supply at these levels hence an upward move in
price is generally probable.
Drawing a support line.
A good starting point is to zoom out on the time frame that you're trading and try to touch as
many lower points as logically possible.

The support should be easily visible upon minor observation and you shouldn't have to hunt or
look hard for them.

Figure 4 Support line example

Comment -
It’s practically acceptable if the support line crosses a candle/wick or doesn't touch the wick or
only touches the wick.
The support line doesn’t have to be perfectly aligned.
We are mostly looking for zones rather than a perfect straight price line.
The examples below illustrate the support line overlapping with candles and wicks or not
perfectly touching the candles. In both these examples, the support line is valid.

Figure 5 Imperfect but a valid support line

Resistance

Resistance line indicates the price where the selling pressure is higher than the buying
pressure.

To elaborate, the supply is greater than the demand which pulls the price lower.
There’s a good probability of price retracing from this price line.

Just like support line, zooming out on the time frame that you're trading and try to touch as many
high points.

The resistance should be easily visible upon observation and you shouldn't have to hunt or look
hard for them.
Examples of Resistance lines below.

Figure 6 Resistance line example

Observation-
The chart above also shows a vital concept of fake-breakout, breakout, retrace and confirmation.
It will be explained later in detail.
Understanding Breakdown and Breakouts

A Breakout occurs when the resistance line is tested several times, leading to an increased
demand in that price zone.
This increase of demand leads to a breakout.
Opinion- The more times a resistance is tested, the weaker it becomes.

Figure 7 illustration of a break-out

Breakdown- It is when the support zone is tested too many times, leading to an increase is
supply at that price point, which leads to lowering of price i.e. Breakdown. PIC

Opinion.
The more times we test a support, the weaker it becomes.

See pic Below

Figure 8 illustration of a break-down

What happens if a Support or Resistance line breaks?
They start acting in the opposite nature.

A support line becomes a resistance and a resistance becomes a support.

This above concept is of utmost importance in understanding and confirming a TREND.

Resistance lines, when crossed, become new support, and the cycle repeats until the trend breaks.

Study this chart carefully to see how Resistance level 1, when broken at 2, after formation of a
new resistance at 3, becomes a new support at 4.

Figure 9 Resistance lines becoming a new support, until a breakdown

This cycle continuous till the breakdown. Take some time to understand the above graph.
Uses of Support and resistance.

Intuitively the use of the support line would be to enter a long when the prices bounce off the
support line and that of the resistance line would be to go short when the price pulls back from
resistance.
However, real world trading isn’t this simple and the above usage needs understanding of
the following

1. Breakouts, Break-down
2. Fake Breakdown/Breakout
3. Re-tests
4. Confirmations
5. Stop-loss hunting

These are explained below

One of the more profitable ways to use support and resistance is to use them at the
Breakdown/Breakout zone.

A Breakout leads to a strong upwards rally in price because of a huge demand at the resistance
zone. Long at the Break-out.

The exact opposite is true for breakdown, which leads to a big pullback in price. Short at the
break-down.
See pic below for Break-out and Break-Down

Advanced uses of Support and resistance in determining high probability entry.

Below I illustrate the advanced practices used by seasoned traders to determine high probability
entries for profits.

However, they are easy to understand upon a repeated reading.

Here we will study

1. Fake Breakouts and Fake Breakdowns
2. Stop loss hunting

Study of the above will help us understand how institutional traders stop out the retail traders and
provide us with a probable solution against stop loss hunting.

Institutional traders stop out BOTH Long and Short retail traders, at the same time, at a similar
price zone. A very common problem that retail traders face is being stopped out. Let us
understand stop loss hunting in detail.

Short hunting at resistance

The red line denotes the resistance line.
At Point A, few retail traders will short it thinking that the price will go down at the resistance.

But the price has a small breakout out. Triggering the stop loss of the people who went short.
This is a fake out as the price then reverses at the resistance. Even though the price goes down,
the stop loss gets hit. Here the trader loses money even after being right. This is short hunting.

With the same chart, we will study long hunting at the resistance.
The wick crosses above the resistance line, most retail traders will long here, calling it a
breakout.
The price is then reversed. Stopping out all the longs. This is long hunting at the resistance.
The same exact stop loss hunting is done at the support. Stop loss hunting for longs and shorts at
the support can be seen here.

This is illustrated in the charts below.

Now that we have understood that taking long/short entries at the support and resistance can get
you stopped out, let us look at the probable solution.

First solution is to look for the following

1. Breakout/Breakdown
2. RE-TEST
3. Follow through

The process of Confirmation and Retest can be used for both long and short entries
1.Confirming the Breakout
2.Confirming the breakdown
3.Confirming the support
4.Confirming the resistance

This chart explains the Re-test and confirmation of support

In this chart, the support is established. Then the price comes back to be retested and the support
is held and confirmed. This confirms the support line. Leading to an upwards rally.
In the same manner, a breakout from a resistance can be confirmed as shown in this chart.
The resistance is broken. The price comes back to confirms the breakout and is confirmed.
On confirmation, a high probability long entry is made.

2nd Solution
After a break-out or a bounce from the support like, wait for the price to break another resistance
above the support line or the break-out levels.
See the example below for entering a long after a bounce at support and break of resistance.

The same concepts can be applied for going short at resistance or breakdowns.
The above concepts will help all beginners from stop getting hunted by an institutional order
block.

This module has covered ALL the information you need about horizontal support and resistance
in great depth.

I will share trend-line support and resistance and Supply and Demand zone tutorials soon. Study
it multiple times and you should be good to go.

Compiled by EmperorBTC

Contact
Twitter- https://twitter.com/EmperorBTC
Telegram Channel- https://t.me/EmperorbtcTA
Personal Telegram- https://t.me/EmperorBTC
Email- emperorbtc90@gmail.com