Resistance

Resistance is a price area where sellers have already halted a rally, and where supply may exceed demand once more.

You spot it by connecting highs where price was rejected. Round numbers, all-time highs, old broken support and weekly peaks are natural candidates.

Resistance is not a wall. It marks an area where a reaction is more likely, not a certainty. The more it is tested, the weaker it can sometimes become, as the sell orders sitting there are gradually absorbed.

Traders use it in three ways: sell on contact with a stop just above, place a buy's take profit just below it, or wait for a confirmed breakout to buy.

The full lessonSupport and resistance: drawing the zones that matterLearn to draw support and resistance as zones, judge how strong they are, use round numbers and spot the role reversal that often follows a clean breakout.