Vertiv Holdings Co (NYSE:VRT) shares moved higher Friday. There is a good chance this move continues.
Vertiv was oversold. It was also at support. These two dynamics can set the stage for a reversal, and it is why Vertiv is the Stock of the Day.
Successful traders understand that certain price levels in the financial markets can have more importance than others. This can be seen on the chart of Vertiv.
As you can see on the chart, the stock found support around $227. This wasn’t a coincidence. There is support at this level because it was support in March.
A number of the traders and investors who sold their shares around $227 regretted doing so when the price rallied. Some of them decided to buy their shares back.
But they also decided that they would only do so if they could get them for the same price they were sold at.
Now that Vertiv has fallen back to this price, these remorseful sellers placed buy orders. There were so many of these orders that it created support at the same price that had been support before.
The psychology of seller remorse can keep support levels intact for extended periods.
If this move higher continues, there is a good chance the shares run into resistance around $273.50. As you can see on the chart, this level was support in June.
Levels that have previously been support can convert into resistance levels. This is a result of buyer’s remorse.
People who purchased shares around this level were glad they did so after they rallied. But when the support broke, some of them changed their minds. They decided to hold on to their positions, but they also decided to sell if they could eventually do so at breakeven.
This means if Vertiv rallies back to this price, they will be selling. And this could create resistance.
Successful traders can identify important price levels. This is one of the reasons they are successful.
VRT Stock Price Activity: Vertiv Holdings shares were up 6.18% at $241.57 during regular trading Friday and up 0.30% at $242.30 in after-hours trading, according to Benzinga Pro data.
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