Resistance is a concept used in technical analysis. It is the point where the rise ends in an ascending chart. Once the resistance point is reached, prices are not expected to rise any further. In this article we will explain the concept of resistance in more detail.
Technical analysis is a method that tries to predict future price movements based on past price movements. Charts are a very important tool in technical analysis. Charts show how prices have changed over time. Various shapes and patterns occur in graphics. These shapes and patterns reflect the trend and psychology of the market.
The resistance is plotted as a horizontal or slashed line on the chart. The resistance line shows the level that prices have reached by rising and having difficulty rising further. Prices below the resistance line begin to decline if they fail to break the resistance level. A resistance level is a point where selling pressure is greater than buying pressure.
A break of the resistance level indicates that the market has changed direction or that the uptrend is continuing. With the breaking of the resistance level, prices begin to rise rapidly. It creates a new support level after the resistance level is broken. The support level indicates the level that prices reached by falling and having difficulty falling further.
To identify resistance levels, it is necessary to look at past price movements. The points where prices have struggled or stopped in the past may be resistance levels. Resistance levels can also be numbers that are considered psychologically important. For example, round numbers like 1000 TL, 5000 TL can be resistance levels.
Tracking resistance levels can help traders make trading decisions. Prices approaching resistance levels may present a selling opportunity. Prices that break the resistance levels can offer a buying opportunity. It is necessary to master technical analysis in order to correctly determine the resistance levels and read the charts well.