Which of the following is the reason stock prices behave the way they do at resistance lines?
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A. B. C. D.C
Resistance is a technical analysis term that refers to a price level where an asset's upward trend is expected to pause or reverse. The reason stock prices behave the way they do at resistance lines is that many investors want to sell at this price.
When the price of a stock reaches a resistance level, it represents a point where many traders believe the stock is overvalued and are willing to sell their shares at that price. This increase in selling pressure can cause the stock price to stop rising and potentially start to decline.
The technical analysis of stock price movements also suggests that resistance levels are important because they represent levels where buyers may become less willing to buy, and sellers become more willing to sell. This change in market sentiment can cause the stock price to stop rising and start to decline.
Market makers, who are intermediaries between buyers and sellers, may also play a role in how stock prices behave at resistance lines. They may resist moving prices lower than the resistance level by buying shares when there is selling pressure, or by limiting the supply of shares available for sale.
In conclusion, while market makers may provide support to stock prices at resistance levels, the primary reason for stock prices to behave the way they do at resistance lines is due to many investors wanting to sell their shares at that price.