Support Base Formation

Definition ∞ Support base formation describes a technical analysis pattern where the price of a digital asset establishes a consistent floor, resisting further downward movement over a period. This indicates a level at which buying interest becomes strong enough to absorb selling pressure. A well-established support base can signal a potential reversal from a downtrend or a consolidation phase before an upward move. It reflects a shift in market dynamics.
Context ∞ Crypto news and technical analysts frequently identify support base formations as crucial indicators for predicting future price action. Reports might point to a specific price level where a cryptocurrency consistently finds buyers, suggesting a strong area of demand. Understanding these formations helps investors gauge market strength and potential entry points for long positions.