Stock Of The Day: Did IonQ Just Break Out?

IonQ, Inc. (NASDAQ:IONQ) shares continue to rally in early Thursday trading.  They have moved significantly higher since announcing a significant new contract.

They also may have broken resistance, and this could be a bullish dynamic. This is why it is the Stock of the Day.

Certain price levels are more important than others in the financial markets. As you can see on the chart, the $41 level has been important for IonQ.

In October and early November, the stock was in a downtrend. There were more shares for sale than there were to be bought. Sellers were forced to undercut each other to draw buyers into the market. This pushed the price lower.

The situation changed when the shares reached support around $41. There were enough buy orders to absorb all of the sell orders. The shares stopped going lower and then rallied.

In February, this support level was broken, and the shares dropped below it. When this happened, many of the people who bought shares around $41 regretted doing so and decided to sell.

But they also decided that they would only sell if they could eventually do so at the same price they were purchased for. When the stock rallied back to $41, these regretful buyers placed sell orders.

The large quantity of these orders formed resistance at the price that had previously been support. The shares sold off after.

But Wednesday, the shares broke this resistance level. This could be a bullish dynamic that results in the price moving higher.

When resistance breaks, it shows that the sellers who created it have left the market. They have either canceled or finished their orders.

With these sellers gone, new buyers will be forced to outbid each other to draw sellers back into the markets. This could force IonQ into an uptrend.

Photo: Shutterstock