Accenture (ACN) technical analysis - NVIDIA (NASDAQ:NVDA), Accenture (NYSE:ACN)

Shares of Accenture plc ACN soared by more than 10% yesterday. But now they are overbought and at resistance. This means there is a good chance they reverse and head lower. It is our Stock of the Day.

There was no news specifically related to Accenture yesterday. Some analysts attribute the move higher due to the selloff in Nvidia Corporation NVDA.

NVIDIA dropped by almost 17%. There is a chance that people who were selling it were taking their money from the sales and buying Accenture. This drove it higher.

The rally may be over. At least for now. The stock is overbought and at a resistance level. These dynamics tend to put a ceiling on the market.

Most of the time, a stock trades within a typical zone or range. But sometimes people who wish to buy become aggressive and emotional. They push the price above the range.

This gets the attention of people who want to sell. Many Wall Street strategies are based on the concept of reversion to the mean. These sellers will be anticipating a move back into the normal range.

Their selling could put pressure on the stock and force it lower.

The red line on the chart below is a Bollinger Band. If a stock trades above it, it’s overbought. That's the case now.

Accenture is also at a resistance level. Resistance is a large number of shares being offered at or close to the same level.

If a stock is trending higher there isn't enough supply, or sell orders, to satisfy all of the demand. But at resistance levels there is. This is why rallies tend to end or at least pause when they reach them.

As you can see on the chart, there has been resistance for Accenture around $372.

The combination of being overbought while at resistance could put an end to Accenture's rally. This is what occurred the last two times the stock reached this level while being overbought.

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