What is Resistance?
Resistance can be defined as a level from which a stock tends to go down. Its a level which indicates that the stock is likely to witness some profit booking, and some downside is possible in the next coming days.
Its is an awareness of patterns associated with resistance zones (areas usually associated with previous trading ranges, in which prices find resistance against further upside) enables investors to more accurately define the direction of significant market trends. S
Identifying the Resistance level of stock is merely done by looking at the last 3-4 high’s of the stock from which it declined, but it takes some practice and is somewhat subjective because there are points that can be considered weak support or resistance and strong support or resistance. Resistance are areas where prices tend to consolidate and reverse. Resistance provides resistance to prices that are shooting pu.
Determining the strength of the Resistance levels also plays an important role, this is done by counting how many times did the stock price declined prices from shooting up further, in other words counting the number of times the stock declined from its support levels, The more times it declined, the stronger and more significant the Resistance point.
But, once a stock successfully crosses its resistance, some more upside can be seen in the stock.
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