Support Level
In short
Price floor where buying interest historically prevents further decline
A support level is like a floor — when a stock falls to that price, buyers tend to step in and it bounces back up. The more times a price level holds, the stronger the support.
Support levels are price areas where demand exceeds supply, causing bounces. They form at round numbers, previous lows, moving averages, and high-volume price zones. A break below support is bearish — old support often becomes new resistance.
Related concepts
- Resistance Level — Resistance is like a ceiling — when a stock rises to that price, sellers take profits and the price falls back. A breakout above resistance is a bullish signal that the stock may make new highs.
- Volume Profile — Volume profile shows where most trading happened at different price levels. Heavy trading at a price means traders consider it fair value. Low trading zones are areas where price moves fast.
- Bollinger Bands — Three lines around a stock's price: a middle average and two outer bands. When the price touches the upper band, it might be overbought. Touch the lower band, possibly oversold. When the bands squeeze together, a big move is coming.
- Simple Moving Average (SMA) — Take the last 50 days of prices and average them. That's the 50-day SMA. It smooths out daily noise so you can see the real trend. Price above its SMA = uptrend; below = downtrend.