Why do traders use support and resistance in their strategies?

Support and resistance are price levels where assets historically stop falling or rising. Traders use them because they help identify entry and exit points. For example, if Bitcoin repeatedly bounces at $40,000, that's support—traders might buy there. If it consistently drops at $45,000, that's resistance—traders might sell. These levels work because many traders watch the same prices, creating a self-fulfilling pattern. When price breaks through these levels with significant volume, it often signals a strong trend. Support and resistance simplify decision-making by providing objective targets, helping traders manage risk through stop-losses and profit-taking levels.