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What is resistance?
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Resistance is a price level in financial markets where an asset tends to stop rising because selling pressure increases. It represents a level at which many investors are willing to sell, preventing the price from moving higher.
Resistance is a level where upward price movements often slow down or reverse.
In technical analysis, resistance levels are identified based on past price behavior where the asset has previously struggled to move above a certain level. When the price approaches resistance, sellers may enter the market, increasing supply and limiting further price increases. If the price breaks through resistance with strong momentum, it can indicate a continuation of the upward trend and the former resistance level may become a new support level. However, resistance levels are not exact and can be influenced by market sentiment, volume, and external factors such as economic news.
Short example:
Suppose a stock repeatedly rises to $100 but fails to move higher each time.
Many investors begin to sell around this level, creating resistance at $100.
If the stock eventually breaks above $100 with strong buying activity, it may continue rising beyond this level.
Disclaimer: Investing brings risks. Our analysts are not financial advisors. Always consult an advisor when making financial decisions. The information and tips provided on this website are based on our analysts' own insights and experiences. Therefore, they are for educational purposes only.
