Price action and chart patterns
Resistance level
A price area above the market where selling has stopped rallies before, so price turned down at least twice.
Why it works
Sellers who missed the last top and buyers taking profit cluster there. Until it breaks, it acts like a ceiling.
How to use it
Sell near resistance in a downtrend or a range, stop above the level. If price closes firmly above it, the resistance may become support.
The typical mistake
Buying right into resistance with the target above it: you need the level to break just to break even.
FAQ
What is Resistance in trading?
A price area above the market where selling has stopped rallies before, so price turned down at least twice.
How do you trade Resistance?
Sell near resistance in a downtrend or a range, stop above the level. If price closes firmly above it, the resistance may become support.