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Support Level A support level marks an area where there is a high probability that a stock or index will reverse to the upside. Support levels are generally established when there is a significant and highly concentrated VMA surge to the downside (i.e., Selling volume). Sometimes, a support level is also created by the buildup of cumulative volume to the downside.
When we speak of a "local support level", we are referring to an area where an index resists dropping below a specific level due to the generation of Selling volume. A local support level has no lasting effect on the general market trend.
Traders can use information about the locations of support levels to anticipate the beginnings of new uptrends, thus allowing them to adapt their trading tactics to trading in an up-trending market. |
