Snap Inc. (NYSE:SNAP) shares are trading higher on Monday. The stock is refilling a gap, and this means the move higher may continue.
If it does, there is a good chance Snap finds resistance around $9.10. This is why it is the Stock of the Day.
See what is going on with SNAP stock here.
Sometimes, newer traders have difficulty picking a price target for their stocks. They often just guess instead of letting the market tell them where to place their sell orders.
More experienced traders try to determine which price levels are important and use them to strategically place orders.
For example, if a stock is in a downtrend and a trader wants to buy it, they can try to determine where the sell-off will end. There tends to be support at the same prices or levels that have previously been support. This makes the support level a logical place to have a buy order.
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If a stock is in an uptrend, a trader may consider selling at a price that had previously been support. As you can see on the chart, there was support for Snap around $9.10 in August and July.
There tends to be resistance at former support levels because of buyer’s remorse.
Many of the people who bought shares around $9.10 were happy they did so after the stock rallied. But when the support was broken and the shares dropped below it, many of these once-happy buyers came to regret their decisions to buy.
Some of these buyers vow to sell their shares if they could eventually do so around their buying price.
This means that if Snap rallies back to the $9.10 level, they will place sell orders. If there is a large concentration of these orders, it could form resistance.
This could put a top on the price and that's why it would be a logical level to sell at.
Bad traders guess when it comes to placing buy or sell orders. Good traders let the market tell them what to do. They identify important levels and act accordingly.
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Photo: Piotr Swat via Shutterstock
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