Shares of Apple Inc. (NASDAQ:AAPL) can teach traders an important lesson about the markets. Some price levels are more important than others and for Apple, $152 is one of them.
As you can see on the following chart, in November it was a resistance level. Many investors sold at that time and price. Then the shares rallied, sold off, and $152 became a support level.
This happened because a number of investors who sold Apple shares at $152 regretted doing so after the price went higher. They decide to buy their shares back, but only if they can get them for the same price they were sold at. As a result of these buy orders, support forms at a level that had been resistance.
Now $152 has become a resistance level once again. This happened because a number of investors who bought AAPL while it was at support regret doing so because the price is now lower.
Some of them decide to sell, but they don’t want a loss. They try to sell at the same price they bought at. They place their sell orders at $152, and if there are enough of them it will form resistance at the level as it did here.
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