SoFi Technologies, Inc. (NASDAQ:SOFI) shares rose 8% on Thursday. The setup suggests the rally could continue.

As you can see on the chart, SoFi reached an important support level. Sometimes stocks rally after reaching support, and this is why SoFi is the Stock of the Day.

If a stock is trending lower, it is because there aren’t enough buy orders to absorb all of the sell orders. Investors and traders who wish to sell are forced to undercut each other and offer their shares at a discount to draw buyers into the market.

Support is a price level where there are a large number of buy orders. There are enough buy orders to fill all of the sell orders. This is when downtrends end when they reach support.

This is what happened when SoFi reached the $15.20 level in March. And as you can see, a rally followed.

The same thing happened in May and June. Now the shares are once again bouncing from this support; stocks tend to rally after they reach support levels. This is a result of anxious and impatient buyers.

These buyers know that in the financial markets, the sellers will go to whoever is willing to pay the highest price. These anxious buyers don’t want to miss out on the trade, so they increase their bid prices.

Other anxious and impatient buyers see this, and they do the same thing. It can result in a snowball effect that forces the shares into an uptrend.

Successful traders understand that certain levels have more importance than others in the market. They know these levels form because of psychology.

They also know that uptrends occur when buyers get nervous and increase their bid prices. An understanding of these dynamics can create profits.

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