Stock Of The Day: Where Is The Bottom In CrowdStrke?

CrowdStrike Holdings, Inc. CRWD shares are trading sideways on Thursday. But over the past week, the shares have been extremely volatile.

Despite this, the stock demonstrated a principle of technical analysis. This is why our technical analysis team has made it our Stock of the Day.

The best traders can identify important price levels in markets. These levels are called support and resistance.

If a stock is trending lower, it is because there isn't enough demand to absorb all of the supply. There are more shares for sale than there are to be bought. This forces sellers to be aggressive and undercut each other's prices and it puts the shares into a downtrend.

At a support level, there is enough demand to absorb all of the supply. This is why sell-offs end or pause when they reach support.

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If a stock is moving higher, it’s because there is more demand than supply. There are more shares to be bought than there are for sale. Buyers are forced to cut in front of each other and outbid each other if they wish to acquire shares. This makes the stock move higher.

In the markets, what had been resistance can turn into support. This is a common occurrence and can be seen on the CrowdStrike chart.

Yesterday, the stock dropped to around $445. This was the low of the day and it was where there was support. There was support here because the level had been resistance.

Some of the people who sold around $445 regretted doing so after the resistance broke. Many decided to buy their shares back at their selling prices yesterday when CrowdStrike dropped to this level. This formed support.

Now there is support for the shares around $456. This can also be seen on the chart. This level had also been resistance.

In the financial markets, certain price levels have more importance than others. Good traders know how to identify them. This gives them an indication of where a trend may reverse.

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