Stock Of The Day: Breakout Time For Cadence Design?

Cadence Design Systems, Inc. CDNS shares are lower Monday. They have found resistance around $325 again.

But they may be on the verge of a breakout. This is why our technical analysis team has made it our Stock of the Day.

In the stock market, certain price levels have more importance than others. As you can see on the chart below, the $325 level is one for Cadence.

In early 2024, the stock was trending higher. There weren't enough sell orders to fill all of the buy orders. Those who wished to buy had to continually increase their bid prices to attract sellers into the market. This forced the shares into an uptrend.

In March 2024, the uptrend ended around $325.

There were enough sell orders to fill all of the buy orders. The buyers didn't need to keep pushing the price higher.

But soon after hitting this resistance, the shares reversed and headed lower. When this happened, some people thought their decision to buy was a mistake.

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They also decided to get out at breakeven if they could eventually do so.

So when Cadence returned to this level in June 2024, these regretful buyers placed sell orders. And there were so many of them that it created resistance again at the same level.

A similar dynamic occurred in December. Remorseful buyers who paid around $325 in June 2024 saw a chance to finally get out at breakeven, and they took it. Their selling put a top on the price once again.

Then, some of the people who had bought shares attempted to exit at breakeven after the price returned to this level in January.  And again, resistance formed.

Now Cadence has returned to this important level once more. The same thing could happen.

However, if the stock can break out above $325, it will indicate that the sellers are no longer present. They have either canceled or finished their orders.

With these sellers out of the way and this large amount of supply taken off of the market, those who wish to buy may start to push the price higher again.

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