Resistance
A price level where selling pressure tends to overcome buying pressure, preventing further price increases.
Resistance is a price level where selling is strong enough to stop advances, acting as a ceiling. Breaking resistance can signal further gains.
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
Place take profit at or before resistance when long
Broken resistance can become support
Look for confluence of multiple resistance levels
Resistance Example
Say GBP/USD rallies to 1.2800 four times and reverses 60 pips each time. That ceiling is resistance: resting sell orders capping every attempt. The fifth test punches through, price runs to 1.2900, and old resistance often becomes new support.
How Traders Use Resistance
Sell near resistance or buy its break, never both at once. Place stops beyond the ceiling, not on it, and demand a retest that holds before trusting a breakout.
Related Terms
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