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What is Support?

Support Definition. Support is a term used in technical analysis to describe a price level in a stock, commodity or currency where buying pressure for the asset exceeds the momentary selling pressure, forming a “floor” that blocks future price movements in the downward direction. The opposite of Support is Resistance. Similarly, it is the level where selling pressure begins to exceed buying pressure, thereby establishing a “ceiling” above which prices will not rise. Technical analysts have developed many tools to ascertain these levels since they signal appropriate entry and exit points that a forex trader will use to his advantage. Many forex traders rely on various wave theories that project these levels at varying points on a pricing chart of the currency. Proponents of Elliott Wave Theory use proportional retracement ratios, sometimes based on Fibonacci intervals, to determine consistent projections for both resistance and support. The wise forex trader then places orders based on these price forecasts to profit from these expectations. Software has been developed that performs the necessary calculations. Typically, resistance, support, pivot points and midpoints are displayed (abbreviations are R, S, P, and M), as in the following example:

Support


Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.