The price at which an asset experiences pressure as the prices rise from an increasing number of sellers who want to sell at that price is known as resistance, or a resistance level.
Resistance levels may be long-lasting or short-lived depending on whether new information surfaces and alters the market’s perception of the asset as a whole. Drawing a line along the highest highs for the time period under consideration will allow you to chart the simple resistance level in terms of technical analysis. Support can be compared to resistance.
An abundance of sellers in that price range will likely result in a resistance level acting as a “ceiling.” As a result, traders can view resistance as a barrier that can only be broken by intense purchasing pressure.
It is crucial to remember that a resistance level tends to go from being a resistance level to becoming a support level, which is essentially the opposite idea. Support levels function as a “floor” that tends to hold the price above them, whilst resistance lines frequently behave as a ceiling, preventing the price from rising further. When resistance or support levels are violated, profitable trading chances frequently appear.
The line may be straight or angled, depending on how the price moves. However, more sophisticated approaches use bands, trendlines, and moving averages to spot resistance.
