A price level where selling pressure tends to prevent further advance.
Resistance is the opposite of support — a level where price has historically reversed downward. It represents an area where sellers overwhelm buyers, creating supply that caps upward movement. Like support, it can be horizontal, diagonal, or based on technical indicators.
Resistance levels help traders identify profit targets and areas where long trades may stall. Resistance also provides entry points for short trades. A confirmed break above resistance is one of the most powerful bullish signals in technical analysis.
A stock has failed to break above $120 three times over two months. Each time it approaches $120, sellers push it back down. When it finally breaks above $120 with strong volume, the old resistance often becomes new support.
Price repeatedly fails to break above the resistance level (red dashed line). Each rejection confirms selling pressure at that price.