Opendoor Technologies Inc. (NASDAQ:OPEN) is trading lower on Wednesday. There is a good chance the downtrend continues.

OPEN is among today’s weakest performers. Check the market position here.

As you can see on the chart, Opendoor has reached levels around $4.85 four times since July 2023, and each time, a large sell-off followed. This is why it is the Stock of the Day.

Resistance levels can stay intact for an extended period of time because of buyer's remorse.

Some of the people who purchased shares of Opendoor in July 2023 came to regret their decisions when the stock dropped. Many decided that if they could eventually sell and exit their positions at breakeven, they would.

As a result, when the stock rallied back to around $4.85 in December 2023, these regretful buyers placed sell orders. There were so many of these orders that it caused resistance to form at the same price that had previously been resistance.

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Then the same thing occurred again.

Many of the traders and investors who bought at this peak regretted doing so after the stock dropped. They vowed to get out if they could eventually do so at breakeven.

So, when the stock returned to $4.85 in July, they placed sell orders, and this made resistance form at the level again. Now, Opendoor has found resistance at this level once again. Another sell-off may occur.

Stocks sell off at resistance when some of the sellers who created the resistance start undercutting each other. They are afraid that other sellers will be willing to offer their shares at a lower price.

They know this is who the buyers will go to, so they reduce the prices they are willing to sell their shares for. Other worry sellers see this and do the same thing.

The result is a snowball effect that can force the stock into a downtrend. This may be about to happen once again with Opendoor.

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Courtesy: Opendoor