A price level where buying pressure tends to prevent further decline.
Support is a horizontal or diagonal level on a chart where price has historically bounced upward. It represents an area where buyers are willing to step in, creating demand that absorbs selling pressure. Support can be identified by previous lows, trendlines, moving averages, or psychological round numbers.
Support levels help traders identify potential entry points for long trades and logical stop loss placement. When support holds, it confirms buying interest. When support breaks, it often becomes resistance and signals a potential trend change.
A stock repeatedly bounces off the $50 level over several weeks. Each time price approaches $50, buyers step in and push it higher. A trader might place a buy order near $50 with a stop loss just below, using the support level as the basis for the trade.
Price repeatedly bounces off the support level (green dashed line). Each touch confirms the level as a buying zone.