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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
A price level where a stock tends to stop rising and fall back down.
Why It Matters
Resistance levels are ceilings that stocks struggle to break through. If Apple has failed to break $200 four times, $200 is resistance. When a stock finally breaks through resistance on strong volume, it often runs higher quickly (called a 'breakout'). Many traders sell at resistance or wait for breakouts to buy.
Key Points
- All-time highs are significant resistance - stocks often pause or pull back when reaching new highs
- A breakout above resistance is bullish; a failed breakout (then falling back) is bearish
- Once resistance breaks, it often becomes support - former sellers become buyers
Related Terms
Common Questions
A price level where a stock tends to stop rising and fall back down. Resistance levels are ceilings that stocks struggle to break through. If Apple has failed to break $200 four times, $200 is resistance.
Resistance levels are ceilings that stocks struggle to break through. If Apple has failed to break $200 four times, $200 is resistance. When a stock finally breaks through resistance on strong volume, it often runs higher quickly (called a 'breakout'). Many traders sell at resistance or wait for breakouts to buy.
All-time highs are significant resistance - stocks often pause or pull back when reaching new highs
A breakout above resistance is bullish; a failed breakout (then falling back) is bearish
Once resistance breaks, it often becomes support - former sellers become buyers