Advanced Micro Devices, Inc. (NYSE:AMD) shares are trading higher on Wednesday. The company recently reported its earnings. But the move may have temporarily stalled out. The stock has run into resistance at a former peak.
"Sell at former peaks" is an old adage, and it may prove to be good advice with AMD. That's why it is the Stock of the Day.
As you can see on the chart, AMD has hit resistance around $186. There is resistance at this particular level for a reason. It was a peak in March 2024.
Some investors and traders who bought shares back then are still holding losing positions. After the price fell, they regretted their purchase and resolved to sell only if they could recover their original investment.
This way, they could exit their positions without losing money.
As a result, now that the shares have rallied back to around $186, they are placing sell orders. These orders have created resistance.
Read Also: Berkshire Hathaway 13F Preview: Did Buffett Trim Apple—And Will The Mystery Stock Be Revealed?
Stocks can reverse and trend lower after they climb to resistance levels. This happens when sellers become anxious and impatient.
They know that the traders and investors who wish to buy will go to whoever is willing to sell them shares at the lowest price. These anxious sellers don't want to miss the trade, so they reduce the prices they are willing to sell at.
Other anxious sellers see this and end up doing the same thing. The result is a snowball effect that forces the price lower.
But sometimes a stock breaks out. This means it gets and holds above resistance. This tends to be a bullish dynamic.
It shows that investors and traders who created the resistance with their sell orders are gone. They have finished or cancelled.
When this happens, the stage could be set for a new move up. New buyers will have to force the price higher to draw sellers back into the market and this could create an uptrend.
If AMD does break out, the next resistance level could be around $215. It was a peak in March 2024. And if it breaks through this, it would be at all-time highs.
Read Next:
• Bessent Wants Aggressive Fed Rate Cuts: ‘We Should Be 150-175 Points Lower’
Photo: Piotr Swat / Shutterstock
