Resistance Level

A resistance level is a price point on a chart where an asset’s upward movement tends to slow down or reverse due to an increase in selling pressure. Traders often view resistance as a barrier that the price struggles to break through. This level is usually identified by past price action. Past price action is where the market has previously peaked and then declined.

Resistance levels are important tools in technical analysis. They help anticipate potential reversal points or areas where a breakout may occur. If the price successfully breaks above a resistance level, it may signal strong buying momentum. This could lead to further price increases. Conversely, if the price repeatedly fails to surpass the resistance, it could indicate market weakness and potential for a downward move.

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