CrowdStrike Holdings, Inc. (NASDAQ:CRWD) shares have dropped almost 15% over the past week. If they continue to trend lower, there’s a good chance they find support around the $117 level. This is why CrowdStrike is the Stock of the Day.
Successful traders understand basic market principles. One of the most important of them is that certain price levels are more important than others.
Sometimes the reason for the importance is not obvious. But this is not important.
Being able to recognize it is.
As you can see on the chart, the $177 level is important for CrowdStrike. In July, the stock was in a downtrend. Nervous and anxious sellers had to undercut each other to draw buyers in.
But when the stock reached $177, they came out of the woodwork. The sellers could unload as much as they wanted to without the price getting any lower.
At this point, the buyers took over. Nervous buyers needed to outbid each other to draw in sellers. This forced the shares into an uptrend.
When the trend turned at this price, it made it important. This means it may be important again.
There are people who sold their shares around $177 that have regretted doing it ever since. Some decided they would buy their shares back. But they also decided that they would only do so if they could repurchase them at the same price they sold them for.
This means that if the shares reach $177, these remorseful sellers will be trying to repurchase their shares. If there are enough of them, it could create support.
Sometimes stocks rally off support. This is also the result of emotions.
Some of the buyers who created the support become anxious and impatient. They don’t want the sellers to go to another buyer, so they raise their bids. This results in a snowball effect that can push the price higher.
The $177 level has been important before for CrowdStrike. There’s a chance it becomes so again.
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