For Immediate Release
Chicago, IL – January 20, 2020 – Stocks in this week’s article are China Distance Education Holdings Ltd. (DL - Free Report) , Intellicheck (IDN - Free Report) , Snap Inc. (SNAP - Free Report) and Mesoblast Ltd. (MESO - Free Report) .
4 Affordable Breakout Stocks for Stunning Return
Selecting breakout stocks continues to be one of the most popular methods among active investors. This technique seeks to identify those stocks whose prices are varying within a specific band. In case a stock falls below the lower bound of this band, it may be time to dump it from your portfolio. However, a stock breaking above this channel carries the promise of delivering strong gains.
Spotting Breakout Stocks
The first step to selecting the right breakout stock is to calculate their support and resistance levels. A support level is the lower bound for stock movements while a resistance level refers to the maximum price which it trades within over a considerable period.
In other words, demand for a stock is at its lowest at its support level, which means most traders are willing to sell it. At the resistance level, most traders are willing to go long on the stock, which means that they would like to add them to their portfolio. The key to identifying breakout stocks is to pin down those that are on the verge of a breakout or those that have just broken above the resistance level.
Verifying Whether It’s for Real
Stocks that have breached their resistance level should ideally be in high demand among traders. But the test of whether this is a genuine breakout is whether they go on to attain higher prices and the old barrier becomes a new support. This is why it is important to determine whether a long-term price trend is about to emerge.
Only a study of long-term trends can determine whether the existing trading channel has been breached effectively. This indicates the strength of the support or resistance levels. If you can identify the effective channel for a stock, picking it even at a not-so-reasonable price would give you significant returns.
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