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Technical Analysis Trading Glossary

Resistance

Resistance is a price area where selling pressure may appear and slow or reverse an advance. Traders use it as part of market structure analysis.

Quick definition

Resistance is an area where price has previously met enough selling interest, profit taking, or reduced buying pressure to slow or reverse an advance. It is an area to observe, not a promise that price will fall.

Why it matters

Why resistance matters to traders

Resistance can help define structure, potential targets and invalidation. It also identifies areas where breakout traders and mean-reversion traders may make very different decisions, which can increase activity around the level.

Practical use

How traders use it

Common reference points include swing highs, range tops, prior support after a breakdown and prominent historical reactions. Traders normally combine the area with trend, momentum, timeframe and the behaviour of price on return.

Common mistake

What to avoid

Assuming a level becomes stronger simply because it has been touched many times can be dangerous. Repeated tests may demonstrate interest, but they may also absorb available orders and prepare the level for a break.

Use the concept, not the label

Trading terminology is useful only when it improves a repeatable process. Define the concept clearly, test how you use it, pair it with risk management, and avoid turning chart language into certainty about what the market must do next.