What is Support

Support is a term used in technical analysis to denote a price barrier, for which it is difficult to force a price trend below.

Support levels represent price troughs or “floors”. They could emerge as a result of the presence of a strong “buy wall”. “Buy walls” occur when a substantial number of buyers are willing to purchase a certain asset.

Support and resistance levels are used by traders to try and spot price reversals. Investors look out for reversal signals whilst devising their buying and selling strategies.

Support levels are usually straight lines but could also be tilted diagonally. Looking back at historical trends is useful. The abundance of more data points allows traders to spot trends that are less likely to be false signals, and therefore to make more informed decisions. Profitable trading windows could be found when support and resistance levels are crossed.

Support and resistance levels should be combined with other indicators for traders to get a better picture and mitigate risks.