Resistance

A price level where selling pressure has historically been strong enough to halt further advances — acting as a ceiling the price has repeatedly failed to break through.

Resistance levels are price points where sellers have repeatedly overpowered buyers, causing the stock to reverse lower. These levels represent supply zones — areas where investors who bought higher are willing to sell to recover losses, or where those sitting on gains are taking profits. The more times a price level has served as resistance, the more significant that level is considered to be.

Resistance can come from previous price highs, long-term moving averages acting from above, Fibonacci extension levels, psychological round numbers, and the underside of previously broken support levels. All-time highs are particularly strong resistance because there are no "trapped" buyers above the current price who create selling pressure.

When price decisively breaks through resistance — especially on high volume — the signal is significant. The prior resistance level often then becomes support on any subsequent pullback. This polarity flip (resistance becomes support, support becomes resistance) is a fundamental concept in technical analysis that traders use to manage entries and exits around key levels.

This definition is for informational and educational purposes only. Nothing on Finance Compass constitutes financial, investment, or trading advice. Always conduct your own research and consult a qualified professional before making financial decisions.