Support level

A support level is the price at which an asset may find difficulty falling below as traders look to buy around that level.

Very often, the markets demonstrate they are not ready to let an asset drop below its support level, but buyers are appearing to raise the asset’s price higher again. That makes them the opposite of resistance levels, opposite to the point at which the markets demonstrate they are not ready to let an asset’s price rise any higher.

If an asset  moves below its support level, then that support level is either wiped out  and a new support level must be identified or reconfirmed, if lots of traders buy the asset.

Recognizing where an asset’s support and resistance levels are can help traders choose the best time to enter a market, as well as where to put stops and limits. Support and resistance levels can be identified by trend lines (technical analysis). Psychological Support and Resistance levels form an important part of a trader’s technical analysis.