Stock Of The Day – Is The Move Higher In Bank Of America Over?

Bank of America Corporation (NYSE:BAC) is trading higher on Wednesday. The company reported earnings that exceeded analyst estimates. It also increased its forecast.

At least for now, the move higher has stalled at around $52.70. There was resistance at this price before. This is why Bank of America is our Stock of the Day.

Stocks often encounter resistance at levels that have previously been resistance.

As you can see on the chart, there was resistance around $47 in November. There was also resistance in February.

The same thing happened with the $48.50 level. It was resistance in June and then again in July.

Resistance can form at a previous peak when people who bought shares regret doing so when the price drops soon after. Some of them decide to hold onto their losing positions.

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However, they also decide that if they ever have the chance to exit the position at breakeven, they will.

As a result, if and when the stock rallies back to its purchase price, they will place sell orders. If there is a large number of these sell orders, it will cause resistance to form.

Now, Bank of America is hitting resistance around $52.75. As you can see on the chart, this level was at resistance in September. Remorseful buyers selling their stocks have, at least for now, put a top on the price.

Experienced traders recognize the importance of trading and investment psychology in the market. The chart of Bank of America shows how remorseful or regretful buyers can create resistance at former resistance levels.

Sometimes, earnings or fundamentals, such as P/E Ratios, can influence the price of a stock. But most of the time, the moves are the result of emotions and psychology. Traders who understand the importance of these aspects in trading have an edge over those who don't.

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