Resistance in trading refers to a level at which an asset’s price tends to stop rising and start to decline.
This level is determined by market psychology and previous price activity. Traders use resistance levels to determine where to enter or exit a trade. If the price reaches a resistance level and fails to break through, it is considered a sell signal.
On the other hand, if the price successfully breaks through the resistance level, it is considered a buy signal. Resistance levels can be determined by using technical analysis tools such as trend lines and moving averages. It is important to remember that resistance levels can change over time as market conditions change.
