7.8What is support?
1What is it?
Support is a price level where falling prices tend to stop, because buyers step in.
2Why does it exist?
Many people consider that price "cheap", so demand rises there.
3Real-life example
A floor: the ball bounces when it hits it.
4Diagram
5Risks
- Support can break, especially on bad news.
- It is a zone, not an exact number.
6Quick revision
- Floor where buyers appear.
- Stronger the more times it holds.
- Can break.
7Knowledge check
Q1. What happens at support?Show answer
Buyers tend to step in and halt the fall.
Q2. Is support an exact price?Show answer
Usually a zone.
Q3. Where might a buyer place a stop-loss?Show answer
Just below support.