Resistance Level
In short
Price ceiling where selling pressure historically prevents further advance
Resistance is like a ceiling — when a stock rises to that price, sellers take profits and the price falls back. A breakout above resistance is a bullish signal that the stock may make new highs.
Resistance levels are price areas where supply exceeds demand, capping advances. They form at previous highs, round numbers, and moving averages. When price breaks above resistance with volume, it often becomes new support.
Related concepts
- Support Level — A support level is like a floor — when a stock falls to that price, buyers tend to step in and it bounces back up. The more times a price level holds, the stronger the support.
- Volume Profile — Volume profile shows where most trading happened at different price levels. Heavy trading at a price means traders consider it fair value. Low trading zones are areas where price moves fast.
- Bollinger Bands — Three lines around a stock's price: a middle average and two outer bands. When the price touches the upper band, it might be overbought. Touch the lower band, possibly oversold. When the bands squeeze together, a big move is coming.
- RSI (Relative Strength Index) — RSI scores a stock from 0–100. Above 70 means it's been rising so fast it might be due for a pullback (overbought). Below 30 means it's fallen a lot and could bounce (oversold).