Support and resistance

Support Level

Within the universe of securites exchange, the Support Level is simply the lowest price a stock trades at over a period of time. The price stops dropping because buyers start to outnumber sellers. The longer the price stays at a particular level, the stronger the support at that level. The stronger the support at a given level, the less likely it will break below that level in the future.

It is said that if a stock breaks prior levels of support only by a small portion, it will drop violently until a new level of suport is reached.