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In technical analysis, a price that a security does not, or only rarely, rise above. Technical analysts identify a resistance level by looking at past performance. When the security approaches the resistance level, it is seen as an indication to sell the security, which will increase the supply, causing the security's price to fall back below the resistance level. If there are too many buyers, however, the security rises above the resistance level. When this occurs, the price of the security will likely continue to rise until it finds another resistance level. It is also called the overhead resistance level. See also: Price ceiling, Support (Support level).
A price at which a security or the market itself will encounter considerable selling pressure. A resistance level is formed when investors purchase large amounts of a security just before a decline and then resolve to sell the security should it again reach the level at which it was purchased. Technical analysts believe that an additional supply of a security will tend to keep its price from rising above the resistance level. Also called overhead resistance level. Compare support level. See also overhanging supply.