Resistance is a price level within a positive trend in the stock price that stops growth and does not allow for continuation, so it is an obstacle. In order for the stock price to continue growth it must overcome this obstacle, i.e. reach a price level above the resistance.
So knowing which companies have just overcome this hurdle and are ready to continue growth is very useful information.
Precisely for this reason within the BullDude.com Membership you will find every day an article called “Resistance Breakout” containing the best companies that have just overcome this obstacle but also an article called “Potential Breakout” containing companies that have not yet overcome this obstacle (Resistance) but have a good chance of doing so in subsequent trading sessions.
In the image above you find an example of this type of article called “Potential Breakout: 4 Interesting Stocks To Watch” published on June 18, 2020 here on BullDude.com where the company Fiverr International Ltd. (FVRR) was reported because it showed a good chance of overcoming the resistance to $ 73 (black line) in subsequent trading sessions. In fact, it did it in just 5 days and the price went from $ 68 (on the day the article was published) to over $ 122 (+ 80%) in the next 2 months.
In mid-February 2021, the price of Fiverr International Ltd. (FVRR) reached $ 335 per share (+ 380%)
How do I know if it’s a false potential breakout?
The potential breakout is defined as “false” when the positive trend that supported the price growth reverses the direction (going from positive to negative). To understand when this event occurs, there is a red half-line in the chart that indicates the level below which the positive trend can be considered concluded.
A few negative days are not enough to call it a “false” potential breakout because often the cause is natural temporary volatility (given by the retest of the signal level or profit taking or general market crash).