Series 66: Support And Resistance

Support and Resistance

Technical traders believe there are prices which a stock may have difficulty pushing past. When a stock price is rising, it may hit a ceiling price called a resistance level that it will “bounce” off of. At this price, traders will begin to sell off their holdings. Conversely, when the stock price is falling it is likely to hit a support level or floor price. When a stock price is at its support level, we say that the stock is oversold and traders will collectively begin to buy. The term oversold means that