Support Level

In cryptocurrency trading, a support level refers to a price point where a downward trend is likely to pause or reverse due to a concentration of buying interest. It acts as a floor for the price, preventing it from falling further. Traders often look for support levels to identify potential entry points for buying, expecting the price to bounce back up from that level.

Example:

Imagine Bitcoin's price has been steadily declining for some time. At $30,000, traders notice that historically, whenever the price reaches this level, there's significant buying activity, causing the price to reverse its downward trend and start moving upward again. Thus, $30,000 becomes a support level for Bitcoin.

Case:

In a bearish market, Ethereum's price drops to $1,800. Traders observe that $1,800 has been a strong support level in the past, meaning there's historically been significant buying interest whenever the price reaches this point. Consequently, many traders anticipate a reversal in Ethereum's price trajectory, leading to increased buying activity around $1,800.