I’ve pulled up the stock Iron Mountain (NYSE:IRM) to highlight one of the key aspects to all trading and investing. Whether intraday or longer-term and which is also a key plank of the volume price analysis methodology, and that’s the importance of levels. These set the key regions of floors and ceilings of support and resistance particularly when focused around the volume point of control, a key congestion zone itself, and therefore together giving us stocks to add to our watchlist for a future breakout from such areas.
The key level here for IRM is at $30.30 per share and clearly defined for us with a cluster of two lines, one red and one blue delivered by the accumulation and distribution indicator for NinjaTrader. What this indicator does is present these as a visual representation of strength.
In other words, the thicker the line than the more times a level has been tested and held firm. However, when two such lines cluster together, this indicates even greater strength or weakness, so here we have a significant ceiling of resistance which as we can see was tested repeatedly in June, September, and more recently in early December. However, what is interesting about the most recent rally is that it has been accompanied by rising volume and excellent volume at that suggesting we are likely to see further attempts to breach this level in due course. The next question is then where is the stock heading longer term?
And the short answer is to the next level of resistance denoted with the red dashed line, another strong level at $34 per share and where, once again, we can see a region that was tested repeatedly in 2019. However, if the price penetrates this level, the way is open for a good run higher as there is little in the way of either volume or priced base resistance to hinder progress.