Business Definition for: resistance level
resistance level
price ceiling at which technical analysts note persistent selling of a commodity or security. If XYZ's stock generally trades between a low of $50 and a high of $60 a share, $50 is called the
support level
and $60 is called the resistance level. Technical analysts think it significant when the stock breaks through the resistance level because that means it usually will go on to new high prices.
See also
technical analysis
,
breakout
Related Terms:
means of predicting stock prices based on historical price and trading patterns; it is not concerned with the financial statistics that are the focus of fundamental analysis. It uses charts (e.g., head and shoulders, rising bottoms) to identify trends in the market or individual securities. Technical analysts believe the market can be predicted in terms of direction and magnitude. Stock prices tend to move with the market because they react to various demand and supply forces. An attempt is made to uncover a consistent pattern in prices or a relationship between stock price changes and other market data. Technical analysts try to predict short-term price changes and then recommend the timing of a purchase or sale. A sample company stock chart follows:
rise in a security's price above a resistance level (commonly its previous high price) or drop below a level of support (commonly the former lowest price). A breakout is taken to signify a continuing move in the same direction.
Referring Terms:
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