Support
A price level where buying pressure tends to overcome selling pressure, preventing further price declines.
Quick answer
Support is a price level where buying is strong enough to stop declines, acting as a floor. Breaking support can signal further falls.
Definition
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
1
Place stop loss below support when going long
2
Broken support can become resistance
3
Look for confluence of multiple support levels
Related Terms
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