Stock Of The Day: Will UnitedHealth Reverse? - UnitedHealth Group (NYSE:UNH)

As you can see on the chart below, it is testing an important resistance level. The chances of a reversal or a breakout are typically greater than going sideways after a stock reaches a resistance level. Resistance is a price level, or narrow price range, where there is a large amount of supply or shares for sale. Rallies tend to stall or pause when they reach resistance. Sometimes, when a stock reaches resistance, the sellers who created the resistance become impatient. They reduce their offering prices so the buyers will come to them. Other impatient sellers see this and do the same thing. It can turn into a snowball effect that pushes the price lower. But sometimes when a stock reaches a resistance level, the buyers eventually overpower the sellers. The resistance breaks, and the price moves higher. This means the sellers have either finished or canceled their orders. With the supply off the market, the stage is set for a move higher. New buyers will be forced to outbid each other if they want to draw sellers back in. This will cause an uptrend. There is resistance around the $350 level because it was a resistance level in January. Some of the people who bought shares then regretted it when the price dropped. They held onto their losing positions, but when the stock returned to their buy price, they started selling so they could get out at breakeven. This created resistance at the level again. Important price levels are like forks in the road. When a stock reaches one of these levels, they tend not to stay at them for too long. They typically either break out or reverse. If a trader can identify important price levels, it can present them with low-risk trades. Image: Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.