The level where the price has difficulty crossing down is called support.
Visually, if the lows created by the price in the past can be connected with a horizontal line, the support appears.
If the support levels are drawn successfully, there might be an opportunity for both selling and buying.
As a matter of principle, it is thought that it is hard for the price that came to the support level to move down and it is accepted that the price that touches the related support will return and start going up. That is why it is believed that the price that reaches the support level will create a signal for buying. Of course, the stop the loss point for the buying positions to be opened shouldn’t be forgotten. In case the price doesn’t return and, the risk is limited by putting the stop the loss order a bit below the support level.
As can be understood from the paragraph above, when the support is broken, the price might go down rapidly for a while. In this situation, there might be an opportunity for selling. When the price breaks the support, it might go down rapidly. In this situation, there is a selling order situated where the support is broken. In case the price comes back and goes above the support, the risk is limited by putting the stop the loss order a bit above the support.
As can be understood, when you think the price broke the support and moving forward, it might actually come back and go above the support. This is called a “bear trap.” You need to be careful against it and pay attention to the recommended stop the loss levels.
Another thing you must know about support is the broken support can work as resistance. If the price broke support for certain, the level becomes difficult for the price to pass which means it becomes the resistance. In this case, there are new support levels appearing below and there might be opportunities you can look for regarding the selling positions in line with the resistance level rules.
Below are examples of some support levels.