Stock Of The Day: Will IREN Breakout?

IREN Limited (NASDAQ:IREN) is our Stock of the Day because it may be on the verge of a breakout.This could be a bullish dynamic, suggesting the shares will continue to trade higher (analysts attribute the move to positive brokerage comments).Like all markets, the stock market moves because of shifts in supply and demand.If there is more demand, or shares to be bought, than there is supply or shares to be sold, buyers will be forced to outbid each other if they want to buy. When a stock reaches a resistance level, the tide turns.There is enough supply to fill all of the demand. This is why rallies end when they reach resistance.Sometimes, stocks reverse and head lower after they reach resistance. This happens when impatient sellers start to undercut each other. It forces the shares into a downtrend.But sometimes when a stock reaches a resistance level, the buyers eventually overpower the sellers and push the price higher. This is called a ‘breakout'.Breakouts are bullish. If the stock gets and holds above resistance, it shows that the sellers who created the resistance are gone.With this large amount of supply removed from the market, it is set up for a move higher. Buyers will outbid each other once again if they want to acquire shares. This can force the stock into a new uptrend.As you can see on the chart below, there is resistance for IREN around $59.50. There is resistance here because it was previously a support level. There can be resistance at former support levels due to buyer's remorse.Some people who bought IREN around $57.50 regretted doing so when the price dropped below it. They told themselves that if they eventually could do so, they would sell their shares at breakeven.Now that the stock has rallied back to this level, they are placing sell orders, and this has created resistance.In the stock market, some price levels are more important than others. If a trader can identify these levels, they will have an advantage over those who don't.Read Also: Fed Has Green Light To Cut Rates After Soft Inflation, Economists Say Image: Shutterstock