Technical Analysis is a tool, not a given. In downtrends, support levels break easily. In uptrends, resistance levels generally smash through to higher highs.

But if you understand the theory, TA can provide good entry and exit points while minimizing risk.

Resistance Levels

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On a one year chart, there was a long battle just under the $8,000 level.

Why do resistance levels often work? Because all those buyers at that level that are still holding are now praying to get out out. At $8,000 many will do so.

The same applies at the $5750 level or so.

There were two bounces at roughly the $3,800 level. Both have failed. The downtrend resumed. Now, the $3,800 level is resistance. At least it's weak resistance.

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Unfortunately, the first chart shows that support (an area where buyers once entered) is a long ways off, approximately $1,975. That approximately a 50% haircut from here.

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