Support is a price level where buying interest is strong enough to prevent the price from declining further. It acts as a price floor.
How Support Forms
- Price falls to a level
- Buyers step in, sellers dry up
- Price bounces upward
- Repeated tests strengthen the level
Trading Support
Buying at Support
- Wait for price to reach support
- Look for bullish rejection patterns
- Enter long with stop loss below support
Breakdown Trading
- If price breaks below support convincingly
- Former support becomes new resistance
- Enter short on the breakdown
Support vs. Resistance
| Support | Resistance | |
|---|---|---|
| Role | Price floor | Price ceiling |
| Action | Buyers enter | Sellers enter |
| Break | Becomes resistance | Becomes support |
Key Points
- Multiple tests strengthen support levels
- Round numbers (1.0800, 1.0900) are strong support
- Combine with volume and candlestick patterns
- Support breaks signal potential downtrend