Here we are doing some good ole fashioned Technical Analysis. Why are we looking at the weekly chart. The daily chart is more accurate then the 1 hour chart, and the weekly is more accurate then the daily chart and so on and so forth. Here we can see that there is a channel between 3.1k and 4.2k, meaning that the prices move up and down in what traders call a channel. Traders watch when the price gets near the top of the channel or over the channel to make a trade, they buy around this area and set up a stop loss. Traders think of this a high probability occasion, especially when the coin touches the top of the channel the third time, this is when traders gain the confidence to make a trade. The coin in this instance will most likely go up but as you might already know trading is a probability game. The probability of the coin going up and breaking over the top of the channel/resistance is hypothetically speaking 70 percent so that leaves a 30 percent chance that the coin will actually not break but fall. So what we do is create a stop-loss for if we are wrong, this enables us to lose a small amount of money but if we are right and the coin price goes up we can make a lot.
If you have more questions feel free to ask.
If you have more questions feel free to ask.