What is Overhead Supply?
It is an area of resistance where there is more supply than you think.
Example: If a stock is trading at $50 per share and has done a lot of trading at this level, eventually it will dip back down and may hit $20 per share. Many of the traders at the $50 level are holding onto the stock in order to break even. This is not a good mentality to have.
If the shareholders didn’t get out at the $48 price point then they are waiting for it to come back to that price level.
As the stock starts trending back up, there is an overhead supply area. When the stock hits it, it pushes the stock down further.
In sum, overhead supply = an area of resistance that pushes the stock down further as the stock climbs back up from a dip.
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It is now January 2019 and there is a lot of overhead supply within stocks… in case people look back to this video and reminiscence on this period lol
Excellent. Thank you.
Hi Sasha, This was actually happened to Philippine Stocks last August when the CNY devaluation occurred.. the overhead supply from a reputed company 220ish went down to 180ish some of them tried to save their positions but what actually happened it breakout below the support line which is 199 even further to 180. I'm sharing this because when it reaches 199 it goes back down to 180 then another week 199 then another week again 180.
what I've learned from you now is to look for an ABCD pattern whether it's new trend breakout UP or DOWN.
and I reviewed the charts of different companies that I had and their A to B, B to C, pattern goes up this sep to oct.
I also learned from you Swing trades and Scaling In UP 🙂 which right now I got green things on my portfolio.
Just want to say thanks for doing this free and well explained vids.
I quote, "keep doing what you love.. and live life abundantly."- sasha
Great simple video. Thank you.