"Amateurs chase price. Professionals wait at the walls."
Welcome back to the
War Room.
In
Part 1, we learned the language of price (Trends). Now, we map the terrain.
The market does not move randomly. It respects invisible walls built by Whales. These walls are called Support (Demand) and Resistance (Supply).
If you can identify these zones, you stop guessing and start sniping. Let’s draw the lines. 👇
🧱 1. Support (The Floor / Demand Zone)
Think of Support as a concrete floor.
Definition: A price level where the asset has difficulty falling below.Psychology: At this level, Buyers are stronger than Sellers. Whales see the price as "Cheap" and step in to buy.Action: When price hits Support, it tends to BOUNCE.Strategy: Look for Long (Buy) entries here. Never Short into Support.
🚧 2. Resistance (The Ceiling / Supply Zone)
Think of Resistance as a glass ceiling.
Definition: A price level where the asset has difficulty rising above.Psychology: At this level, Sellers are stronger than Buyers. Traders who bought at the bottom are taking profit, and Bears are opening Short positions.Action: When price hits Resistance, it tends to REJECT (Fall).Strategy: Look for Short (Sell) entries here. Never FOMO Buy into Resistance.
🔄 3. The S/R Flip (The Golden Rule)
This is the most powerful concept in Technical Analysis.
"Old Resistance becomes New Support."
The Scenario:The price struggles to break a Resistance level (e.g., $100).Finally, a massive green candle BREAKS through $100.The price goes to $110, then comes back down to test $100.The Magic: The $100 level, which was once a Ceiling (Resistance), now acts as a Floor (Support).Why? Traders who missed the breakout are waiting at $100 to buy. Sellers who got trapped are closing their positions at break-even.Strategy: Don't buy the breakout candle. Buy the Retest.
⚔️ Strategist’s Decree: The safest entry is not the breakout; it is the Retest of the Flip Zone.
🖍️ 4. How to Draw S/R (Zones, Not Lines)
Beginners make a fatal mistake: They draw a single thin line at exactly $50,000.
The Market is not perfect. It is messy.
The Zone Rule: Never draw a line. Draw a Rectangular Box (Zone).Cover the Wicks: A zone should cover the candle bodies and the wicks (shadows) of previous rejections.Touch Points: The more times the price touches a level and rejects, the stronger that level is.2 Touches: Valid.3+ Touches: Strong Fortress.
⚠️ 5. Fake-outs (The Trap)
Whales know you are watching these lines.
Sometimes, price will pierce through a Support level, trigger your Stop-Loss, and then instantly rocket back up.
Defense: Wait for a Candle Close. Do not act while the candle is still moving. A wick below support is a trap; a body close below support is a breakdown.
🏁 Phase 4 (Part 2) Conclusion
You now have the map.
Support is for Buying.Resistance is for Selling/Taking Profit.The Retest is for Entering.Zones are better than Lines.
🚨 UP NEXT: Phase 4 (Part 3) - Candlestick Patterns
Now that we have the levels, we need a "Signal" to enter. We will learn to spot the Hammer, the Shooting Star, and the Engulfing candles that confirm the reversal.
Follow Demented Capital. Hold the Line. 🛡️
#TechnicalAnalysis #SupportResistance #tradingStrategy #CryptoEducation💡🚀 #DementedCapital $BTC $ETH $SOL ❓ Question for the Battalion:
What is your favorite trading setup?
A. Buying the Support bounce?
B. Buying the Breakout & Retest?
Let us know in the comments! 👇