What Causes Support and Resistance Levels to Be Penetrated?
If support and resistance levels are based on prices where bulls and bears buy and sell, respectively, with equal aggressiveness, something has to occur to change at least one side’s opinion. There are a few things that can change—the company, the market, or the environment for stocks. News of any of these changes does not itself move prices. Rather, it is the perception by the bulls and bears of the meaning of that news that moves prices.
The Company
Company news can be a new product, a lawsuit, executive changes, financial problems, new stock offering, and many others. Is the news good or bad? Is it fresh news or old news? That depends on whom you ask.
One example would be when its ...
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