Share prices rise and fall depending on, amongst other things, investor confidence. When shares are falling, they may reach a level where investors start to buy, perhaps feeling that the shares are now a “bargain”. The price would then rally slightly. Effectively, the share price has “bounced” off a minimum value. The rally in the share price may be temporary – it may start to fall again, and even bounce when it reaches roughly the same price. We say that investors are providing support for the shares at that price. Support levels indicate the price at which most investors believe the price will rise.
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