In financial markets price levels that were previously support can convert into resistance. That’s why the GameStop Corp. (NYSE:GME) rebound may have halted.
This conversion happens because of buyer’s remorse.
In August, the $150 level was support for GameStop. There was a large number of buyers and they put a floor under the price and a rally followed.
Now the price is lower.
Many of these investors experience buyer’s remorse and decide to sell, but they're reluctant to take a loss so they place their sell orders at the same price they bought their stock at.
If there are enough of these sell orders at or close to the $150 level, it will cause resistance to form. That may have happened here.
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Photo: Dimitris Chapsoulas on Unsplash
