Support Line

A support line is used in technical analysis to determine a price level through which an asset is unlikely to pass. Using lines of support and resistance allows investors to assess whether an asset is near the top or bottom of its short-term trend. Support lines can be drawn at any price point which the asset has touched several times, but has not passed for a given length of time.

In a long position, a support line shows the lowest price the asset should fall to and in a short position it shows the highest price it should rise to.

A basic trading strategy is to buy at levels of support and sell at levels of resistance.

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources:

• Retained Earnings
• Fraud Triangle
• Accounts Receivable Turnover Ratio
• Marginal Cost Formula
• Nash Equilibrium