Understanding investor and trading psychology is an important aspect of trading.
As you can see on the chart below, in early March, Snap hit resistance around $5.35. A selloff followed.
When this happened, the people who sold at the resistance thought their decision to sell was a good one. But when this resistance broke in April, many of them changed their minds.
They came to think that their decision to sell was actually a mistake.
A number of them decided to buy their shares back if they could eventually repurchase them at the same price they were sold for. As a result, when Snap dropped back to around $5.35, they placed buy orders.
These orders created support at the price that had been resistance.
When a rally followed, people who…
