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Published On: Mon, Sep 25th, 2017

What Is Resistance In Stocks? This Chinese Leader Overcame It, Broke Out

Resistance and support are technical factors chart readers use to describe certain trends affecting a stock’s price. Resistance holds a stock below a certain level and blocks it from going higher. Support keeps the stock above a certain price, and prevents the stock from breaking down.

Here we will focus on resistance.

Resistance is generally the effect of profit taking. Institutional investors may be committed to booking profits at a certain level, for instance. Every time the stock reaches that level, sellers step in and overwhelm buying demand, sending the stock price lower.

You can see this again and again in many different ways in stock charts. A stock rally often peaks at a particular level. The stock falls back, then periodically rises to ‘test resistance’ at that level. When sellers step in, the stock generally falls back again into another period of price consolidation.

Align Technology (ALGN) met resistance near the 65 level from January 2014 to March 2016. Priceline Group (PCLN) faced resistance around the 1,375 to 1,475 level for 28 months to July 2016.

IBD’S TAKE: To stay on top of the market direction, read IBD’s The Big Picture column, a key source Read Full Article

Source: Investor Corner – IBD

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