Alpha Support & Resistance

Supply & Demand areas

One of the most common trading setups is buying at support and selling at resistance. The support and resistance lines dynamically generate lines that signify where the resistance and support is. Support and resistance lines can be thought of as supply and demand zones.

Many traders will choose to support & resistance areas to set open buy and sell orders. Though this is a worthwhile idea it is more ideal when support and resistance are use as a part of the trade plan in conjunction with much higher probability setups. Although lets start off focusing on the main functions of support and resistance and how to use our indicator to identify these areas.

Support/Resistance	Green or Red Line
Support	Green Line
Resistance	Red Line

The following screenshot display's bitcoin support and resistance lines from 29k to 39k. Notice how price action tested all the red line resistances on the way up. It took a bit of consolidation under the red support lines before price action had enough volatility built up to break above those supply zones (Resistance)

Conversely just as price action can find resistance on the way up, it can also find many supports on the way down. Example below: green lines are support areas as price action is in a stage 4 downtrend.

The support and resistance areas can also be used to measure your potential risk/reward once in a trade.