Resistance

What Is Resistance?

Resistance is a level on a price chart where upward momentum tends to weaken as selling pressure increases. It is the opposite of support. When price approaches a resistance level, traders and investors may begin to sell, believing the asset is overvalued or likely to reverse. This causes price to stall, consolidate, or fall back.

Resistance can be horizontal, diagonal (trendline-based), or dynamic (moving average-based). Identifying these zones helps traders time exits, set targets, or anticipate breakouts.

Why Resistance Matters

Understanding resistance helps traders:

• Identify potential profit-taking zones
• Avoid buying too late in a rally
• Anticipate pullbacks or reversals
• Confirm bullish breakouts when resistance is broken

Resistance levels are often used to place sell orders, trailing stop losses, or to measure risk-to-reward ratios for trades.

How to Identify Resistance

Historical Price Action

If price repeatedly failed to move above a certain level, that level becomes resistance. Traders look for past highs that were followed by a decline.

Volume at Price

High trading volume near a certain peak can signal strong resistance. This means many sellers entered at that level.

Moving Averages

Key averages like the SMA50 or SMA200 can act as resistance when price is below them.

RSI & Momentum Indicators

If RSI approaches overbought territory near a resistance level, it can reinforce the chance of a rejection.

Trendlines

In a downtrend, a descending trendline that price fails to break may act as dynamic resistance.

Example of Resistance

Let’s say Solana (SOL) has approached $40 multiple times but fails to break higher each time. Traders notice this behavior and mark $40 as a resistance level.

Eventually, if the price breaks through $40 with strong volume and closes above, this may indicate a bullish breakout, and the level could flip to become support.

Resistance Flip to Support

Once a resistance level is broken, it can become support. This flip is watched closely by traders as it often validates a breakout and confirms a trend continuation.