3 Cryptocurrencies For Chart Watchers

Understood and applied correctly, technical analysis should be an illustration of the supply and demand dynamics occurring in a given market. Knowing which levels and trends are important will give traders an edge over those who don’t.

The $1,950 level is important for Ethereum ETH/USD. It was resistance in February and March, but now it’s a support level.

Levels that had been resistance turning into support in a common occurrence in the financial markets. It happens because of remorseful sellers.

These investors sold Ethereum at $1,950. After it trended lower, they think they made the right decision to sell, but when Ethereum broke this level and traded higher, many of these investors changed their minds.

Now they regret their decision.

A number of these remorseful sellers decide to buy, but they will only do so if they can get it for the same price they sold at. This allows them to mentally erase their mistake.

As a result, buy orders are placed at the level that was previously resistance. If there are enough of these buy orders, it will cause support to form. This is the case with the $1,950 level for Ethereum.

The same dynamic can be seen in Litecoin (LTC). The $235 level was resistance in February and has become a support level.

Knowing what levels are important can benefit traders.

In this case, suppose a trader decides to buy Litecoin if it reaches $234. Litecoin could fall to $235, find support, and then move higher. This trader would have missed out because they didn’t know there was support at $235. Had they known, they would have placed their order at $235 instead.

Then they wouldn’t have missed it.

Charts can help keep things in perspective.

For instance, with the media hype around Dogecoin DOGE/USD, an investor could think it has been soaring to new highs.

A look at the chart shows that over the past week, despite its volatility, DOGE has stayed around the 35-cent level.