Resistance

What is resistance?

In technical analysis, resistance is a price area where new selling will emerge to dampen a continued rise. (Source: CFTC)

A resistance level is a price point where a security’s price pivots and changes direction. They are formed when you can draw a horizontal line between two or more pivot price points.

The resistance level is the highest price that a security trades at over a period of time. The more frequently a resistance level is tested (i.e. hits a previous resistance level pivot point but does not rise any further), the stronger the resistance at that level. For this reason, many traders believe that the stronger the resistance, the less likely the price will break through that level.

A resistance level can become a support level if the price of the security rises above the resistance level; similarly a support level can become a resistance level if the price of the security falls below the support level. (Source: Wikipedia)

See also:
Support