Synopsys, Inc. (NASDAQ:SNPS) shares are trading lower Monday. But they are testing an important price level. A large move may be imminent. This is why Synopsys is the Stock of the Day.
In the financial markets, certain price levels have more importance than others. These are called support and resistance levels.
At support levels, there are large quantities of shares to be bought. If a stock is in a downtrend, there aren’t enough buy orders to absorb all of the sell orders. Sellers sometimes offer their discounted shares to draw buyers into the market.
This can create a downtrend. These downtrends end at support levels.
The opposite is true at resistance levels. There are large quantities of shares to be sold. If a stock is in an uptrend, there aren’t enough sell orders to fill all the buy orders.
