Support
A price level where buying pressure tends to overcome selling pressure, preventing further price declines.
Support is a price level where buying is strong enough to stop declines, acting as a floor. Breaking support can signal further falls.
Support is a price level where demand is strong enough to prevent price from declining further. Buyers step in at support, creating a "floor" where price tends to bounce. Breaking support can signal further declines.
How It Works
- Price approaches support level
- Buyers enter, creating demand
- Price bounces or consolidates
- Break below = potential further decline
Types of Support
Horizontal Support
Previous lows, round numbers
Trend Line Support
Rising support in uptrends
Moving Average Support
Price bouncing off MAs
Trading Tips
Place stop loss below support when going long
Broken support can become resistance
Look for confluence of multiple support levels
Support Example
Say EUR/USD falls to 1.0800 three times in a month and bounces 50 pips each time. That shelf is support: resting buy orders absorbing every test. The fourth test breaks it, price slides to 1.0750, and old support often becomes new resistance.
How Traders Use Support
Buy near support, never into it blindly. Wait for the bounce to show, place the stop beneath the shelf rather than on it, and flip the level to resistance in your plan once it breaks.
Related Terms
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