In trading, resistance refers to a level where the price of an asset repeatedly struggles to move higher. At this level, selling interest increases, either from traders taking profits, short sellers entering the market, or automated systems reacting to technical signals.

Resistance levels can be identified through:

• Previous highs where price reversed

• Psychological round numbers (e.g., $100, $1,000)

• Trendlines or horizontal price zones

• Technical indicators like Fibonacci retracements or moving averages

Resistance functions as an important concept in technical analysis, signaling areas where a price rally might lose momentum. If an asset approaches resistance and fails to break above it, this may indicate weakening bullish momentum.

However, if the price breaks through resistance with strong volume, it may signal a bullish breakout. In this case, the former resistance often becomes a new support level, a concept known as role reversal.

Resistance is typically not an exact price but a zone where price action slows or reverses. Its strength increases with the number of times it has been tested without breaking.