Support

From Traderpedia

Definition:
A level at which buyers are expected to enter the market in sufficient numbers to take control from sellers.


The market has a memory. When price falls to a new low and then rallies, buyers who missed out on the first trough will be inclined to buy if price returns to that level. Afraid of missing out for a second time, they may enter the market in sufficient numbers to take control from sellers. The result is a rally, reinforcing perceptions that price is unlikely to fall further and creating a support level.

Support can be formed by accumulation or distribution.

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