Support and resistance levels ( S/R levels ) are essential tools for a cryptocurrency trader. These indicate zones that usually have a high concentration of orders, helping to identify crucial points on a cryptocurrency's chart. Below, we present a brief introduction to support and resistance levels, their importance, and some of the factors that determine their strength.

Support and resistance are indicators used by technical analysts to determine the price points where an existing trend is most likely to reverse or stop. They are generally used in conjunction with other indicators, such as moving averages (MM), the RSI, Bollinger Bands (BB), and many more. It is essential to understand the difference between a support level and a resistance level.

In the realm of cryptocurrency markets, a bearish trend is characterized by a constant decrease in the price of a cryptocurrency. Prices fall when supply exceeds demand. Support zones are levels where the market tends to bounce back. These are points at which demand begins to equal supply, generally reversing the prices of cryptocurrencies.

An upward trend is defined by a continuous increase in the price of an asset. Cryptocurrency prices rise in part due to excess demand over supply. Resistance zones are levels where supply begins to match demand, indicating the possibility of a trend change. If demand becomes stronger than supply, resistance levels may be broken. However, such breakouts usually require multiple attempts. The price tends to touch resistance and be rejected several times before finally surpassing it.

When someone wants to buy or sell a cryptocurrency, they must place an order. In a market with numerous participants, there is also a considerable number of orders. Due to psychological factors such as FOMO, greed, herd instinct, and many others, people tend to place their orders at similar price levels. Therefore, in practice, what defines support and resistance levels is the relationship between supply and demand combined with market psychology. Essentially, support and resistance levels are concentrations of buy and sell orders, also known as high liquidity zones.

Support and resistance zones can be classified as strong, intermediate, or weak. Let's examine some of the factors that determine their strength.

1. **Number of touches. If a specific price level has withstood numerous touches without breaking, it is often considered a strong level of support or resistance.**

2. **Round numbers. Due to human psychology, some market participants tend to give more importance to S/R areas with round prices.**

3. **It worked both as support and resistance. If a S/R level has acted both as support and resistance at different times, it is more likely to continue functioning as a high liquidity zone in the future ( either as support or as resistance).**

**Learn more:** [Explanation of the basic principles of support and resistance](https://academy.gate.io/en/articles/basic-principles-support-resistance)