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The support level is the lowest price a security trades at, over a period of time. The price stops dropping because buyers start to outnumber sellers. The longer the price stays at a particular level, the stronger the support at that level. Many traders believe that the stronger the support at a given level, the less likely it will break below that level in the future.
It is said that if a stock breaks prior levels of support only by a small portion, it will drop sharply until a new level of support is reached.
External links
- Support (http://www.tradingeducators.com/resources/glossary_p.htm#S/)
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