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Glossary
Resistance
Definition
The price level at which a rising price is expected to stall when market participants begin to sell the instrument. The opposite of resistance is support.
What is resistance?
In technical analysis, resistance is a price level at which a stock or market tends to stop rising and may start to fall. It's the point where the selling interest overcomes buying pressure. Resistance levels can indicate a price ceiling or a barrier to further price increases.
Why is resistance important to consider when trading?
Understanding resistance levels is important for traders as it helps in making informed decisions about entry and exit points. If a stock price approaches a resistance level, it may indicate a potential sell signal or a pause in buying. Traders use resistance levels to set target prices and stop-loss orders, helping to manage risk and capitalise on market movements.