Question

A technical analyst has been charting the price movements of ABC stock. The stock has been fluctuating in price between $41 and $46 per share for the past 3 months. If the analyst expects a breakout through the resistance level, which order should be placed?(A) Buy ABC @ $40 Stop GTC(B) Buy ABC @ $41 Stop GTC(C) Buy ABC @ $46 Stop GTC(D) Buy ABC @ $47 Stop GTC

Answer 1

Answer:

Buy ABC @ $47 Stop GTC

Explanation:

Since he expects  a breakout through the resistance, that means above $46.

The order to be placed is a pending order, since he places the trade in anticipation of price break above. The type of pending order will be a Buy stop order.

See the attached diagram for clear explanation