Rio Tinto Group (NYSE:RIO) shares are moving higher Thursday. They gained 5% yesterday after some bullish commentary from the CEO. The rally broke through resistance. But now the shares are overbought and may consolidate before moving higher again. This is why Rio Tinto is the Stock of the Day.

Resistance is a price or a narrow price range where there are large amounts of shares for sale.

If a stock is trending higher, there are more shares to be bought than there are to be sold. Investors and traders who wish to acquire shares are forced to outbid one another and pay premiums to attract sellers.

This can force the shares into an uptrend.

When the shares reach a resistance level, the dynamic changes. There are enough sell orders to fill all the buy orders. Buyers can obtain all the shares they wish without pushing the price any higher.

Anxiety And Impatience

Stocks tend to selloff after reaching resistance.

This occurs when some sellers who created the resistance become anxious and impatient. They worry that other sellers will be willing to sell their shares at a lower price.

As a result, they reduce their offering prices. Other impatient sellers see this and do the same thing. They undercut each other, and this drives the price lower.

But sometimes, at resistance levels, buyers eventually overpower sellers and force the price above that level. This is called a ‘breakout', and it is considered bullish. It shows that the sellers who created the resistance are gone.

With this supply out of the way, buyers will be once again forced to outbid each other. This creates a new uptrend.

As you can see on the chart below, Rio Tinto recently broke resistance around $97. Yesterday, it also broke the resistance around $101. This could set the stage for another uptrend.

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