What is "resistance"?

[bergers_n_fries]

quick question here

people on this forum comment on stocks and refer to resistence points or resistence...meeting resistence etc

what does it all mean and how is it controlled???

any explanation would be appreciated

 

[MS+Tradesim]

Re: Resistence

It's just a point where sellers tend to meet and outweigh buyers and prevent the price rising further in the short term. A stock price may move away from the area and come back only to meet the same phenomenon. This can happen repeatedly. The opposite is support - a point or area where buyers tend to outweigh sellers and stop the price from falling further. There's no way to control it, so to speak. It's just something to learn about, be aware of, and you can use it to your advantage.

Some basic info here:

http://www.investopedia.com/articles/technical/061801.asp

Ps. I'll see if I can find a better link. The writer of that article speaks of things like Moving Averages "propping up" prices for example. But lines drawn on charts don't prop up prices. Buyers prop up prices and sellers hold them down. Lines drawn on charts are just useful for visualizing these phenomena. Lines and indicators have no magical properties for predicting the market. They merely "indicate" outcomes which might have higher probability than other outcomes. For example a strong support line indicates that price might be more likely to bounce up off the support level rather than break through and fall further.

Pps. There is a simple discussion here: http://www.incrediblecharts.com/technical/support_resistance.php

 

[Stormin_Norman]

resistance is a price at which there is a large player, or group of market players who wish to sell. so as the market buys and the price hits this level, their selling activity forces the price back down.

ie the price 'resists' going higher.

in currency, if you have shorted a pair, resistance points can be where large market players have orders to go long, and the price 'resists' falling through that level.

support points are the opposite. support is resistance working 'for' you, stopping a price from moving against you. resistance works 'against' you, stopping a price from moving for you.

 

[MRC & Co]

resistance is a price at which there is a large player, or group of market players who wish to sell. so as the market buys and the price hits this level, their selling activity forces the price back down.

Plus many who are looking to cover their longs, perfect place is where a large player sits and protects. Together, not just those wishing to sell, but those looking for a place to cover previous longs (or even cutting and reversing, or those fading the point), they create a barrier, which cannot be breached unless someone really big is interested in buying.

Can be seen extremelly easily in DOM, hard part is knowing how much the buyer has to do

 

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Resistance is a price level where there are large quantities of sell orders in the market. Resistance exists above the current market prices and will act as a obstacle to the price increasing further.