Support

What is support?

In technical analysis, support is a price area where new buying is likely to come in and stem any decline. (Source: CFTC)

A support level is a price point where a security’s price pivots and changes direction. They are formed when you can draw a horizontal line between two or more price pivot points.

The support level is the lowest price that a security trades at, over a period of time. The more frequently a support level is tested (i.e. hits a previous support level pivot point but does not fall below it), the stronger the support at that level. Some traders believe that the stronger the support at a given level, the less likely it is to break below that level in the future. It is said that if a security breaks prior levels of support only by a small portion, it will drop sharply until a new level of support is reached.

A support level can become a resistance level if the price of the security falls below the support level; similarly a resistance level can become a support level if the price of the security rises above the support level. (Source: Wikipedia)

See also:
Resistance