Resistance

Resistance is an area on a chart where an advancing price has stalled or reversed before. The idea is that sellers have shown up there in the past, perhaps because traders who bought higher want to get out at break-even, or because others see the level as expensive. It is the mirror image of support.

Resistance is better treated as a zone than an exact line. Prices rarely turn at precisely the same tick, and different charts and brokers show slightly different highs.

How traders identify it

• Previous swing highs, especially ones tested several times.
• Round numbers, such as 1.1000 on EUR/USD or 150.00 on USD/JPY.
• Former support that has been broken, which often becomes resistance afterwards ("role reversal").
• Levels from tools such as moving averages or Fibonacci retracements.

Example

Illustrative figures: GBP/USD rallies to 1.2800 three times in a month and falls back each time, reaching 1.2788, 1.2803 and 1.2796. A trader might mark resistance as a zone of roughly 1.2785 to 1.2805 rather than a single line at 1.2800. If price later closes well above that zone on a daily chart, it is a potential breakout, and the old resistance may be watched as support on a pullback.

Common misconception

Resistance does not "hold" because of any law of markets. Levels are broken all the time, and the more obvious a level is, the more stop orders tend to sit just beyond it, which can lead to sharp moves through it. Treat levels as places to pay attention, not as predictions. Our guide to support and resistance covers zones, round numbers and false breakouts.