By Mark Putrino
Publication Date: 2026-04-13 18:29:00
If a stock makes a rapid move through price levels, then eventually consolidates and returns to those levels, it is likely to move quickly back through them. This is a basic market principle.
It happens because when a stock moves rapidly through price levels, only a small amount of vested interest may develop among traders and investors.
A common reason resistance forms in markets is that people with losing positions have an opportunity to sell at break-even. See below.
Broadcom Chart
In January, people who purchased shares around the $355 level regretted doing so after the price fell below it. Some of them decided that they would hold onto their losing positions, but if they ever had the opportunity to exit at breakeven, they would do so.
So when the shares returned to this price, they sold. There were so many of these sell orders that it created resistance around the level again.
As you can also see on the chart, in December the price dropped from around $412 to around $355.
The shares…
