Resistance levels are 'pivot points' usually identified beforehand by a previous low, or high and major moving averages. On the Intraday chart and daily chart it could be defined by the 20, 50 and 200 period (or day) moving averages. The more times a 'support' level is hit, the price retreats. Buyers will buy near these areas of resistance, or basing expecting a breakout. Stocks nearing resistance levels are like express trains stopping at a station for a certain amount of time before they 'take off'.
We look for stocks breaking out of strong support and/or resistance on heavier volume than usual. Usually earnings reports and reports of increasing earnings expectations will cause a stock to move above its previous pivot point and run up considerably. A profit surprise on stocks with high fundamental rank and relative strength rank will cause resistance levels to be broken down and new highs established. Momentum can also trigger reversals of support levels irrespective of fundamental or any news. The 2:00 and 3:00 reversal periods can cause reversals of oversold stocks leading to bounces above prior support levels. (IMO)
We look for stocks breaking out of strong support and/or resistance on heavier volume than usual. Usually earnings reports and reports of increasing earnings expectations will cause a stock to move above its previous pivot point and run up considerably. A profit surprise on stocks with high fundamental rank and relative strength rank will cause resistance levels to be broken down and new highs established. Momentum can also trigger reversals of support levels irrespective of fundamental or any news. The 2:00 and 3:00 reversal periods can cause reversals of oversold stocks leading to bounces above prior support levels. (IMO)
