Support – An excellent buying opportunity tool

Many of the technical analysis gurus recommend buying stock at support level and they believe that this as a very effective stock trading strategy or this can also be treated as excellent tip.

Support level is believed to be a stock trader tool. Stock trader who mostly believes in technical analysis looks at the stock chart pattern and discovers the support level of the stock and decides this support level as buying opportunity. It is having said that support level is a best point where one needs to take a buying decision as downward risk is less, while upside is quite significant.

Buying and selling is a part of stock trading as well as stock investing and finding out exact buying point of stock is definitely a very difficult and complex task; however with the help of stock chart the task is quite easy, as the stock chart gives clear picture where the support level of the stock lies.

Typically support level arises from resistance level. If XYZ stock break out its resistance level with significant volume, then that resistance level act as a support level for that stock in future. For examples

XYZ stock is in trading zone of $52 to $55 for quite sometime and suddenly the stock breaks $55 with significant volume and makes it’s upward tread say to $60 and if from $60 the stock gets corrected or move downward then that stock probably finds its support level at $55 and if that stock bounce back from $55 then $55 becomes its support level and $60 as its resistance level.