Support Line

This is when you draw a line joining all the lows of a price pattern together; the line is called a support line. These lines are a low point on the chart on which the price bounces off consistently when reached. Many traders would elect to buy when the price reaches this point. Experienced chartists believe that the market likes to test support lines more than once and will only look for buy signals after a second or third testing of this line. If a support line is broken then the current trend is said to be broken or in a down trend and the market will look for a lower price to set up a new support level.

These levels are very powerful and should be monitored diligently when reached.