In the stock market, levels that had been support can convert into resistance levels. This may have just happened with the Financial Select Sector SPDR Fund ETF XLF, which means it may trend lower.
The conversion from support to resistance happens because of buyers’ remorse. As you can see on the chart below, the $36 level was important support for XLF in September and March. Many investors bought the ETF when it was there.
But now the price is lower.
A number of the investors who still hold it now regret their decision to buy. They want out, but they're reluctant to take a loss.
As a result, they place their sell orders at, or close to, the same price they bought at. In this case, it’s $36. If there are enough of these sell orders, it will create resistance and that’s what happened here. It could be the start of a new downtrend.
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