Definition of Resistance

resistance is the price level to which a security appreciates and attracts sellers. The new sellers keep the security’s price from rising any higher.

Applying "Resistance" to Securities Exams:

Many technical traders will enter their orders based on a security’s technical patterns. Investors who want to trade off of a resistance area will enter orders to sell the security in the resistance area with the expectation that others will do so as well and will cause the security’s price to decline. Should the price of the security break above the resistance area other investors will enter orders to buy the security anticipating that the price will appreciate further.

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