Business, Legal & Accounting Glossary
A resistance level is a level at which the stock price has had difficulty breaking through historically. It is thought of as the level at which a lot of traders tend to exit long positions in the stock, or sell short.
Resistance Level is a stock price level at which a chartist believes a stock will have difficulty exceeding.
The most basic terms used in Technical Analysis are support and resistance.
Resistance is the term used for the price at which a stock begins a downturn, i.e. a peak level. For example, one could determine the support and resistance levels of a stock by the 52-week high and low prices. This would establish a band of trading for that stock. A technically inclined investor may sell-off at the resistance level, and, enough selloffs at this point makes it difficult for the price to exceed that price point. In other words, the stock price runs into “resistance” at a certain price point due to profit-taking by those who bought in at lower prices. Hence the name “resistance.”
It’s worth noting that if resistance were always dependable, stocks would never trade out of their banded ranges. But every day on the stock market, stocks hit new highs and lows. Thus, resistance is more a trading term used primarily by people looking at the stock market in the shorter term. And we have rarely ever met or seen a resistance or support level that wasn’t broken — understanding and anticipating WHY, well ay, there’s the rub.
Support
Resistance
Resistance level
Moving average
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This glossary post was last updated: 29th November, 2021 | 0 Views.