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What is a resistance level?

 

In technical analysis, a resistance level is the price level which a security fails to go above due to the increasing number of traders that wish to sell that security at that price.  The resistance levels can be identified by drawing either a straight line or slightly angled line across a chart of a security’s price for a specific length of time that connects its highest price points.

 

Resistance levels are important as they provide an indication of what price investors will most likely sell a particular security.  However, it is important to note that resistance levels, just like support levels, are not set in stone.  They can change over time for a security, depending on a variety of conditions.