Taiwan Semiconductor Rises After Strong Earnings Report

Taiwan Semiconductor Manufacturing Company Limited TSM saw its shares increase following an earnings report that exceeded expectations.

Investors often complicate market analysis, but it’s important to remember that supply and demand primarily drive market trends. When there aren’t enough shares available for purchase, buyers may be forced to raise their prices to attract sellers.

This behavior often leads to an upward trend in stock prices.

However, dynamics shift when a stock hits a resistance level, where the supply of sell orders outstrips demand from buyers. In this scenario, market participants can acquire shares without pushing the price higher.

Occasionally, stocks may reverse direction upon reaching resistance, as sellers become concerned that prices will continue to drop. This concern can lead multiple sellers to lower their prices, creating a chain reaction that drives the stock down.

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Conversely, if buyers maintain pressure at a resistance level, it can result in a breakout where the stock price climbs higher. Taiwan Semiconductor appears to be experiencing such a breakout, as illustrated in the chart below.

A breakout indicates a shift in market dynamics. If the price surpasses the previous resistance level, it signals that sellers have either canceled or completed their orders and exited the market.

With this increased supply removed, buyers may drive the price up again to acquire shares. This suggests that Taiwan Semiconductor could be entering a new upward trend.

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