Forex Dictionary Terms


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Definition – What does Support mean?

Support is a specific price level that price action in a currency pair hasn’t gone below in the historical period being used. Support acts as a technical tool for traders to identify significant moves within the time period they are trading.

The idea is that the support line supports (hold up) the price of the currency pair.

ForexTerms explains Support

For example, if a day trader looks at a 5-day chart for the EUR/USD and sees that its lows have touched 1.3300 many times but never went below, that would form the 5-day support level. A longer term trader might look at month over month support and see that the EUR/USD has hit 1.3000 several times but has never closed below that, making 1.3000 a significant support level. When support levels are breached, it can mean the start of a downward move or it can simply be a false breakout. For this reason, support alone is not enough of an indicator to make informed trades.

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