Support and Resistance Example, Research in Motion (RIMM)

The following stock chart of Research in Motion (RIMM) offers a great example of simple support and resistance. Support and Resistance is a basic form of technical analysis used commonly every day to mark potential buy and sell points on a stock chart.

Note: This chart of Research in Motion is a eight month daily stock chart:

1. The blue 1 show us how Research in Motion originally broke through resistance at $143 to claim new highs. The stock though a few days later collapsed back into its base (2), a bearish sign.

2. The blue 2 shows us how Research in Motion collapsed not only back into its based but also below its key $129 support trendline. This heavy volume gap down day was a very bearish sign for the stock overall.

3. The blue 3 shows how RIMM climbed back above $125 which became support but couldn't hold up as the stock fell back into the $120s and below. This would have been another entry point to short the stock.

4. The blue 4 shows where RIMM has most recently found support around $100 - $103 a share.

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Comments

  1. Posted by Matt on September 10, 2008 at 6:14 pm

    Another great chart, thanks Blain!

  2. Posted by rhinodude47 on September 10, 2008 at 7:05 pm

    Great visual look, these charts help a lot even for an experienced investor

  3. Posted by RayJMan on September 10, 2008 at 8:01 pm

    nice technical chart, helps explain it a bit more
    I think 100 is kind of a pschological level as well.
    Disclaimer, I have some $105 front month calls that I've been picking up on the dips on RIMM to below $100.

  4. Posted by Blain Reinkensmeyer on September 10, 2008 at 11:30 pm

    You are a believer in the rebound play huh Ray? If $100 holds the stock may definitely see a quick move to $110 - $115 ish.

  5. Posted by RayJMan on September 11, 2008 at 9:30 pm

    sold my calls when the underlying was about $107 unfortunately
    hard market, took profits, but i think RIMM has further to go

  6. Posted by Blain Reinkensmeyer on September 12, 2008 at 9:02 am

    If the market reverses back into the bears hands the only way it will go is down.

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