Support
A price level where a downtrend tends to pause due to a concentration of demand or buying interest.
Plain-English Meaning
Support is like a floor. When the price of an asset drops to a support level, buyers often step in because they see it as a good deal, which stops the price from falling further.
Why It Matters
Traders use support levels to find potential entry points for buying or to set stop-loss orders just below the support. It helps identify where the market has historically shown strong buying interest.
Simple Example
If Gold drops to $2,000 and bounces back up multiple times, $2,000 becomes a recognized support level where traders expect buyers to step in again.
This educational example uses selected assumptions for reference calculation purposes. Real conditions may vary by broker, exchange, or instrument.
Beginner Mistake
Assuming support is a solid, unbreakable wall. Support is a zone, not an exact number, and strong momentum can easily push the price straight through the "floor."
Note: Support levels are chart-based reference areas, not guaranteed turning points.