Support Definition
In cryptocurrency and blockchain terminology, “support” refers to a specific price level which an asset struggles to fall below due to strong buying interest. Essentially, it is the level at which demand tends to be strong enough to prevent the price from falling further.
Support Key Points
- Support represents a price floor or level where buying interest overpowers selling pressure.
- It is used in technical analysis to predict price behavior.
- The stronger the buying interest at a specific price level, the stronger the support.
- Breaking a significant support level is usually followed by an accelerated decline in price.
What is Support?
In the context of cryptocurrency and blockchain, support is a price level that a token’s price has difficulty falling below due to strong buying interest. This is typically identified using past trading data and observing price patterns.
Who Uses Support?
Traders and investors in the cryptocurrency market primarily utilize the concept of support. It is a key component of technical analysis and can be used by anyone interested in cryptocurrency trading to make informed decisions about when to buy or sell.
When is Support Used?
Support is most often used in technical analysis, a trading discipline employed to evaluate investment potential by analyzing statistics gathered from trading activities. This method can be applied when traders want to determine optimal entry and exit points in the market.
Where is Support Used?
Support and its counterpart, resistance, are used in all trading markets, including stocks, commodities, forex, and in our case, cryptocurrencies. You’ll find it mentioned in market analysis updates and trading platforms.
Why is Support Used?
Support is used to help predict price behavior. If a coin’s price repeatedly drops to a certain level but does not go below it, traders may believe that it will not drop below that level in the future, which can influence their trading decisions.
How Does Support Work?
When a price drops towards a support level, it is because there’s an oversupply (more sellers than buyers). When it reaches the support level, the number of buyers usually exceeds the number of sellers, causing the price to rise. However, if the number of sellers exceeds the number of buyers (even at support), this could cause the price to break the support level and fall further.
