Glossary · Defined term
Resistance level
A resistance level is a price where selling pressure has repeatedly stopped rallies, acting as a ceiling until broken.
Last updated Oct 2, 2026
What it means
A resistance level is a price at which a stock has repeatedly stopped rising and turned lower, as if hitting a ceiling. It forms because sellers emerge at that price: trapped buyers from earlier peaks sell to break even, short sellers add to positions, and profit-takers exit. Each failed attempt reinforces the level in traders' minds.
Resistance is most meaningful when it has been tested multiple times. A level that turned back three separate rallies commands more respect than one touched once. Round numbers often act as resistance for psychological reasons, as do prior highs and declining moving averages that sellers defend.
The key event is the breakout. When a stock pushes decisively above resistance on strong volume, the sellers are exhausted and the old ceiling often becomes new support, as former sellers turn into buyers defending their fresh positions. Failed breakouts, where the price pokes above and quickly falls back, are equally telling and often lead to sharp declines.
An example
For illustration, a stock rallies to $100 three times in four months and falls back each time. Traders mark $100 as resistance; when the stock finally closes at $103 on heavy volume, the breakout signals the sellers have given up.