Financial Glossary: Resistance


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Resistance

Resistance

In Technical Analysis, a barrier - the opposite of support.

A resistance is marked by a previous price High that provides enough of a barrier above the market to halt a price advance. Often support and resistance areas occur at round numbers.

Resistance levels show pauses in the uptrend that are usually surpassed at some point.

Whenever a drop in price penetrates a support level or a rise in price penetrates a resistance level, they potentially reverse their roles and become the opposite i.e. a support level becomes a resistance level and a resistance level becomes a support level.

They can also be used to Spot a potential trend Reversal when either a previous support level in an uptrend or a previous resistance level in a downtrend has been breached.

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