Using past consolidation zones to determine key areas of S/R

Using past consolidation zones to determine key areas of S/R

Using past consolidation zones to determine key areas of S/R

Bitcoin / TetherUS BINANCE:BTCUSDT

Using past consolidation zones to determine key areas of support/resistance (“S/R”)

In this chart, I’m using a script that I’ve published (called Bollinger bands + RSI Strategy”) <Linked: Related Ideas> to determine the key areas of S/R (refer to Note 1 (below) to briefly understand how the script behind works). For the purpose of this analysis, we will ignore the performance of backtested results. We will only rely on past entry/exit price points to plot horizontal lines and treat them as S/R going forward.

In the above Illustrated BTCUSD example :
Marked up in freehand (lime circles), you will see that the strategy has entered long at positions of prices at approx. 35.8k, 31.8k, 34.2k, and 31k, respectively, in chronological time order. For marketable securities (or crypto in this case) that are frequently traded in high volumes, these areas of S/R tend to get re-tested in the near future. (Maybe, can imagine, it is because humans (whales) tend to see them as having meanings, and may view them as targets). Take 35.8k in the example; it didn’t hold at the very beginning, shortly gets re-tested, tanks again, and up to the the point-in-time of now when this idea is being published, “it may possibly” re-test 35.8k again.


Note1: The strategy in the underlying script simply enters into long position whenever indicators of BOLL + ATR suggest price volatility is decreasing, later exits the position when RSIs show overbought, or in alternative case when price touches the trailing-stop-loss limit. For details, you may read the summary of that strategy.

Disclaimer: The idea above is solely based my personal views. This post is not an investment advice. Viewers are suggested to consider the advantages & practical limitations of the idea/strategy on their own. If this post contradicts with other school of thoughts, then viewers will apply their own professional judgment to make the prevailing investment decisions.

Bitcoin