Prior Resistance is the New Buy Zone

Hey there! My name is Nate and I write for WOLF Financial. If you enjoy learning about trading, I guarantee you’ll also enjoy my content on 𝕏 @tradernatehere. Thanks for reading!

This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.

When markets pull back it is tempting to take a break, but this is precisely when you should be paying the most attention.

“Prior resistance is now support” is a line we have all heard numerous times but how often have you put it to use?

This simple and well-known strategy can make you a lot of money, but you have to know how to execute.

I have outlined buy zones for three tickers that I am watching closely for a potential “buy the dip” opportunity.

Here’s what to look for:

SMH

By now you might have noticed I am a huge fan of semiconductor stocks and SMH is the ETF I track to understand the sector as a whole.

After making all-time highs we have seen shares pull back which could be setting up a nice entry for more upside.

Resistance levels can come in the form of a single, hard level, or you can create zones which is what the chart for SMH highlights.

We could get another opportunity to buy if shares pull back to bounce on the most recent resistance level, which comes in between 163.20 and 165.44.

If markets are going to rally from here, I like semiconductors to lead the way.

ANET

Arista Networks has been a consistent winner throughout 2023 and could see more upside in 2024.

That will depend on how well prior resistance holds up as support.

The most recent resistance level is at 216.29, which is where an ideal buying opportunity could present itself.

Keep in mind, a pause at support levels is not enough. We are looking for support followed by a move higher.

The odds of a continuation higher will improve further if you wait to confirm both support and the initial move up before entering a trade.

The third set up is already sitting on support and has made its initial move higher.

DKNG

Prior resistance has proven to be solid support for shares of DraftKings on multiple occasions.

First at the 26.41 price level and more recently we have seen 34.29 hold up as strong support.

You can see the move higher to close out the week after the bounce off of support.

Will shares push towards 39.06 yet again?

This is certainly a spot to consider entering the trade.

If shares do push higher, keep an eye on resistance above. If it is broken through, you know where your next support level is at.

Thank You!

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Have a great week of trading ahead and a safe close to the year.

-Nate

 @tradernatehere