AppLovin Corp (NASDAQ:APP) is consolidating on Wednesday. It has stalled out at resistance around the $728 level.
There is a chance this resistance breaks and the shares move higher.
• AppLovin shares are experiencing downward pressure. What’s pulling APP shares down?
AppLovin is the Stock of the Day.
Resistance is a price or level at which there is a large amount of sell interest. As you can see on the chart, in this case, there is resistance around $728.
Sometimes, when a stock reaches resistance, it sells off, as AppLovin did in September. But sometimes when a stock gets to resistance, buyers eventually overpower sellers, and the price moves higher.
A way traders can gain insight into whether or not resistance will break is to analyze the stock's various trends.
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Markets are typically viewed in three trends.
These are short-term, intermediate-term term and long-term. If a stock is trending higher in all three of these timeframes, it is showing exceptional strength and there is a good chance the move will continue.
This could be in contrast to a stock that may be in a long-term uptrend but also in a short-term downtrend. For example, if in a year a stock went from $10 to $100 in a year but then dropped back to $90 in a week, it would be in a long-term uptrend but a short-term downtrend.
Some traders use moving averages to analyze trends.
On the chart, there are the 10-, 100- and 150-day moving averages. These represent the short-term, intermediate-term and long-term trends. If all three of these are heading higher, like they are here, it shows strength in all three time horizons.
Traders can gain insight into whether resistance may break by considering the strength of the relevant trends. AppLovin is showing exceptional strength. This means there is a chance that the resistance around $728 breaks and shares move higher.
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