Rocket Lab Corporation (NASDAQ:RKLB) is trading higher on Friday. The stock his been in a downtrend after breaking a support level.

As you can see on the chart, the $78 level was important support for Rocket Lab. After this support broke, a large move lower followed. This downtrend may end around the $57.50 level. This is why Rocket Lab is the Stock of the Day.

Support is a price level in a market where demand for a stock is high. There are enough buy orders to absorb all of the sell orders. This is why selloffs end or at least pause when they drop to support.

Sometimes, stocks rally after reaching support. This happens when some of the sellers who create the support become anxious and impatient. They start raising their bid prices.

Other anxious buyers see this and do the same. It forces the shares into a downtrend. As you can see on the chart, this is what happened with Rocket Lab in early May.

But sometimes support can break, and the price can head lower. This happens when the buyers eventually overpower the sellers. It just happened with this stock.

Support breaks can be followed by rapid moves lower. With buyers out of the market, sellers are forced to undercut one another because demand is insufficient. This can put the shares into a downtrend.

Rocket Lab may next find support around $57.50. This level was support in April. There are people who sold then who have regretted doing so ever since because now the price is higher. Some of them have vowed to buy their shares back if they can get them at the selling price.

This means if Rocket Lab reaches $57.50, they will place buy orders. If there are enough of these buy orders, it will create support at the level again. This could be where the selloff ends.

RKLB Stock Price Activity: Rocket Lab shares were up 1.50% at $68.36 at the time of publication on Friday, according to Benzinga Pro data.

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