TRADING GLOSSARY

Support: where buyers overpower sellers

Support is a price level where buying pressure historically exceeds selling pressure, causing price to bounce upward. It acts as a floor under the price, representing an area where buyers consistently see value and step in to purchase.

How support forms

Support develops at previous lows where price reversed, round psychological numbers, moving averages acting as dynamic support, Fibonacci retracement levels, and areas of high volume (volume profile nodes). The more confluent factors at a level, the stronger the support.

Trading support

Buying at support: In an uptrend, buy when price pulls back to known support. Place your stop loss below the support level. If support holds, you get a low-risk entry with a defined stop. Support break: When price closes below support on high volume, it signals a trend change or acceleration to the downside. Old support often becomes new resistance.

Testing and re-testing

Each time price tests support and bounces, the level is reinforced — more traders see it and expect it to hold. However, support levels that have been tested many times eventually weaken as the buying interest at that level gets absorbed. A level that has held 5+ times is strong, but if volume decreases on each bounce, it may be weakening and a breakdown is approaching.

AskTrade’s Technical Analysis Agent maps all key support levels and evaluates their strength for every analysis.

Disclaimer: This is for educational purposes only and does not constitute financial advice. Trading involves significant risk of loss.

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AskTrade analyses are AI-generated and do not constitute financial advice.