$OCGN Overhead Resistance Explained- Video and Transcript
Turbo Trading's Head Trader Robert Knight, MBA explains the concept of overhead resistance using stock $OCGN from November 2, 2021, as an example. A transcript is below the video.
This is just a quick video on the concept of overhead resistance. And the reason I brought this up cause of, $OCGN, Tyler and I were just talking about it. Now, one thing that's key to remember is that resistance levels, when they're broken, become support and support levels, when they break become resistance, always.
So we see that this $OCGN does have resistance up here around the $16 area. $16.15 and today it did trade to $16.28. So, which is right at the top of the, you know, right at the double top there. A lot of volume in here, you can see in a big volume, the stocks traded, 135 million to date, which has huge volume for this stock.
And I mean, these candles are, you know, 500,000. Up in here these candles, we're 5, 6 million. So there were a lot of people in here expecting this to go higher, got into a nice rising channel, stayed with. You know, broke over, 15 period moved down through the 50. If you were a VWAP trader traded below VWAP, and then just absolutely got smacked down, pulled back up, and then next laid down Kaboom.
Now it's grinding. It's way higher. Now that it's back up through the 50 here. We can see that this now is a resistance area where we’re topped up too. But imagine all the people that are in this trade up in here, look at the volume. I mean, and then this capitulation down here, huge volume.
So you've got two things. You have all the people that we're buying up here who are long, the stock bag holders. And you have all this buying down here. Where you have the dip buyers. You have the capitulation. The people that bought it up here, selling it and get in capitulation or some of them.
And you have, you know, dip buyers taking this. So now when you come back up into an area here, that's resistance. Just imagine you were sitting there and your spouse/partner. Whatever is looking over your shoulder and they are going, ‘What are you doing? How come you're still in the stock? You paid $15.50 now it’s at $12.’ And you go, ‘Yeah, I know if I can just get back anywhere near where I bought this, I'm going to get out of this stock.’
And that's exactly what resistance is. Because two things happened. Well, three things happen. One, the bag holders are happy just to get out at a near breakeven. Two the shorts, know that the bag holders want to get out. It's anywhere near resistance. And three, the dip buyers know that the shorts are going to be shorting where the bank holders want to get rid of their stock and so they'll take their profit.
So. this here, now we look at this, it's made a V bottom, right? An extension. Maybe it's in a bit of a rising channel now, but there's this huge overhead. Now I'm not looking to buy a stock like this in hopes that it's going to try and bust up through these levels. I'm looking for charts that are strong.
Where I don't have this type of resistance to make a move. This is really an ugly chart and probably rolls over and continues to trade lower.
