support level
nounDefinition of support level
— called also support area
Examples of support level in a Sentence
Recent Examples on the Web
Among Republican women, the support level was at sixty-four per cent. — John Cassidy, The New Yorker, "Some Reasons to Be Skeptical About Trump’s Embrace of Gun Control," 9 Aug. 2019 To find the best ones for every type of sleeper, our textile pros searched the market and found ones with various cooling mechanisms, support levels, price points, and unique features. — Lexie Sachs, Good Housekeeping, "The Best Cooling Pillows, According to Textile Experts," 20 Dec. 2018 His support level is more than Bolsonaro's and centrist candidate Marina Silva's put together. — Mauricio Savarese, Fox News, "Brazil's presidential debate held - without Da Silva," 9 Aug. 2018 The yen gained against the dollar Monday, after some 50,000 anti-Abe protesters rallied on the weekend outside parliament and new polls showed Abe’s support levels approaching lows that have led past prime ministers to resign. — Isabel Reynolds, Bloomberg.com, "Japan Wonders If Abe Can Bounce Back Again After Scandals Pile Up," 16 Apr. 2018 The primary difference in these support levels is that when mainstream support ends, performance improvements, new features and free support also end. — Ken Colburn, azcentral, "Still running Windows 7? Probably not for much longer; Here's what you need to know," 2 July 2018 And if Trump took the blame for that happening, his support level in key parts of his base might well decline. — Ed Kilgore, Daily Intelligencer, "The House Is in Play in 2018, But the Senate’s the Big Prize," 18 June 2018 That unity is in contrast to how Americans regarded dealing with Iran in 2015, when Republican skepticism of Obama offset Democratic optimism for the deal, dragging down the overall support level. — Tracy Wilkinson, latimes.com, "Trump's reality-show handling of prisoner release belies hard diplomacy ahead with North Korea," 10 May 2018 The benchmark index pushed above that support level just ahead of the last hour of trading on Tuesday and stayed higher for the rest of the session... — Tory Newmyer, Washington Post, "The Finance 202: Trump's war on Amazon undermines his trade case against China," 4 Apr. 2018These example sentences are selected automatically from various online news sources to reflect current usage of the word 'support level.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
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More Definitions for support level
support level
nounFinancial Definition of support level
What It Is
A support level is the price at which stock buyers jump in to purchase shares, establishing a floor beneath which it's difficult for the price to fall.
How It Works
Support, along with its cousin, resistance, are extremely important concepts in swing trading, and they are predicted by drawing horizontal trendlines on a stock price chart. These trendlines identify trading opportunities.
At least two highs or two lows in the same area are required to create a support level. The pattern gains greater validity every time the stock "tests" price support levels by bouncing off of it.
Let's look at a chart for the hypothetical stock TREN:
The chart shows the following:
> R1-S2. TREN trends sharply downward. It finds support in early August at $35, where it then moves sideways, or "consolidates," for several days.
> S2-R2. The shares rally briefly from roughly $35 to $40. Notice how we can connect R2 with S1 by using a straight line. What had been for a short time a support level has now turned into a resistance level.
> R2-S3. Between mid-August and early September the shares drop precipitously, from $40 to $30.
> S3-R3. The rally is brief. TREN recovers to $35. What had been support at S2, $35, has now turned into resistance at R3.
> R3-S4. A mid-September decline takes TREN from $35 to $27.
> S4-R4. TREN pushes back to $30, the level at which it had previously found support (at S3).
> R4-S5. The shares decline to their final early October low of just over $25.
Why It Matters
According to technical analysis, stock prices move within support and resistance levels. When these levels are broken, stocks are free to move into a new price pattern where new highs and new lows are established.
Once a stock hits a support (floor) or resistance (ceiling) level, it can easily retrace in the opposite direction. Stock traders use prices determined by support levels to set stop loss orders on their trades.
InvestingAnswers has several swing trading tutorials written by Dr. Melvin Pasternak, a leading expert in technical analysis. To learn more, read them here:
Swing Trading Support & Resistance -- learn two of the most important tools for analyzing a chart.
Source: Investing Answers