Thread: Resistance becoming Support doesn't make sense to me

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  1. #1
    avsvzbwevmq
    Guest

    Default Resistance becoming Support doesn't make sense to me

    A chart hits a level multiple times but can't break above it - that's resistance - it's saying this stock doesn't deserve to be higher than that. If the price does break above it, then it's telling me the stock is lucky to be above that level, not that that level will now act as support and should hold as a pivot point where it might not trade below anymore.
    Especially if the resistance before becoming support had many many hits on it - this means many times that the price shouldn't be above there and thus even more lucky for the stock to ever be traded above it, not that having so many prior hits on it as resistance now makes it an even stronger support level.

    And vice versa for Support becoming Resistance.
  2. #2

    Default

    It's like telling a 2 year old "don't go upstairs" "don't go upstairs" "don't go upstairs", and if they somehow make it upstairs, they're allowed to stay up there only because they were told not to so many times in the first place. The more times they were told not to go upstairs actually works in their favor to be allowed to stay upstairs.
  3. #3
    bangml02
    Guest

    Default

    Uh, what? If your asking what I think your asking, the stock only goes upstairs cause there is a demand for it to be upstairs. Or, mommy and daddy are tired, never really wanted the stock anyway, and are at their wits end so they're either going to hope the kid goes away and stays upstairs, or wait for it to come back downstairs and then deal with it then. Or, at least I think...
  4. #4
    Beaconbdb
    Guest

    Default

    I really should give a better answer than the one I did above, so here goes.

    There are a bunch of reasons a stock can start trading above resistance or below support. Earnings could be better than expected, industry or sector growth, favorable government policy, or, inversely, unfavorable government policy, industry or sector decline, earnings worse than expected. If a move is based on some type of fundamentals, than it is likely to be stronger because the value of the company, and therefore its stock, has increased or decreased.

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