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Resistance

In technical analysis, resistance is a price level at which a security or market index has difficulty breaking above. It is a level where the supply of the security exceeds the demand, causing prices to stop rising and potentially reverse direction.

Resistance is often identified on a price chart as a horizontal line connecting the highs of previous price peaks. If a security approaches this line and fails to break through it, this can indicate that the resistance level is holding and that prices may begin to decline.

Resistance levels can be caused by a variety of factors, including psychological barriers, profit-taking by traders, or a lack of buying interest. They can also be influenced by market trends, such as changes in economic conditions or shifts in investor sentiment.

Resistance levels are important for technical traders, as they can provide potential areas for selling or shorting a security. If a security approaches a resistance level and is unable to break through it, this can indicate that prices are likely to decline. Traders may use this information to place short trades or to exit long positions.

Overall, resistance is a technical analysis term that refers to a price level at which a security or market index has difficulty breaking above. Resistance levels are important for technical traders, as they can provide potential areas for selling or shorting a security. Resistance levels can be influenced by a variety of factors, including psychological barriers, profit-taking, or market trends.

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