Resistance
A price level where selling pressure tends to overcome buying pressure, preventing further price increases.
Definition
Resistance is a price level where supply is strong enough to prevent price from rising further. Sellers enter at resistance, creating a "ceiling" where price tends to reverse. Breaking resistance can signal further gains.
How It Works
- Price approaches resistance level
- Sellers enter, creating supply
- Price reverses or consolidates
- Break above = potential further gains
Types of Resistance
Horizontal Resistance
Previous highs, round numbers
Trend Line Resistance
Falling resistance in downtrends
Moving Average Resistance
Price rejected at MAs
Trading Tips
1
Place take profit at or before resistance when long
2
Broken resistance can become support
3
Look for confluence of multiple resistance levels
Related Terms
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