S1 Support Breakouts

by @scanx

S1 Support Breakout Stocks

What are S1 Support Breakout Stocks?

S1 Support Breakout Stocks are those that have moved below their Support 1 (S1) level. In technical analysis, the S1 level represents a key support point, where prices may tend to stop falling and even reverse. When a stock breaks down from this level, it suggests the stock is losing strength and could continue moving downward. Traders use this as an indicator of a potential bearish trend.

What do S1 Support Breakout Stocks Tell Us?

An S1 support breakout occurs when a stock price falls below its first support level, signaling increased selling pressure and bearish sentiment. It suggests potential weakness and continuation of a downtrend. Traders monitor volume, next support levels, and resistance at S1 to assess opportunities or risks.

Filters Used to Sort the Above Stocks

1. Support 1 Standard > Price

This filter is used to identify stocks where the current price has moved below the S1 level, indicating that they have broken down the support. This is important because it helps in identifying stocks that have breached this strong level and are moving downwards.

2. Price > Support 2 Standard

This filter ensures that the price is not below the Support 2 level, reinforcing that the stock has sufficient strength to either bounce back. This ensures that the stock is maintaining its stability and has not fallen to much weaker support zones.

Key Takeaways

1. Identifying Potential Downtrends

When a stock’s price falls below its first support level (S1), it often suggests a growing bearish sentiment. Traders can use this sign to spot early indications of a downtrend, helping them decide whether to go short or adjust their risk management.

2. Evaluating Support Breakdowns in Context

Observing an S1 breakdown is more insightful when paired with volume data and an understanding of overall market trends. A sharp price dip accompanied by rising sell volume, for instance, can signal a deeper slide. By combining these observations, traders gain a clearer view of possible continued downward pressure.

3. Technical Indicators

Using support levels like S1 is a common strategy for traders to gauge market sentiment and strength. Breakdowns from these levels often attract selling interest, signaling negative market sentiment.

4. No Guarantees

A breakout below the S1 level doesn't ensure long-term movement but is a useful indicator of short-term momentum. Traders should use this alongside other indicators to make well-informed decisions.

5. Trader and Investor Focus

These breakouts are often closely watched by traders looking for potential entry points in stocks as shorts. Investors may also use these signals to identify stocks to exit their holdings.

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Identifies stocks falling through support lines possibly forecasting extended declines