Support means a specific price point on the trading charts that market participants keep an eye on to pick up massive “buying” opportunities. The support price typically indicates the level at which asset prices stop falling any further.
Understanding the term
While addressing technical indicators in order to make out what any particular price chart has to say, traders must understand the significance of support and resistance indicators. Crypto traders, in particular, use these concepts to better plan a trading strategy and avoid risky opportunities. Support and resistance levels give traders an insight into the market’s movements, whether they are going downwards or upwards at any particular moment.
Unlike resistance, people consider that support highlights a price point at which both investors and traders are prepared to purchase an asset while sellers hold on to it and therefore create a growing demand within the market. All of this ultimately pushes the asset price to new highs. In this sense, the support level is quite the opposite of the resistance formed while trading a financial asset.
Since support is seen as a specific line on a trading chart, we can define it as a level below which the price of any asset (such as cryptos) will not decline. Support levels tell us that there is sufficient demand for an asset in the market.