A resistance level, in technical analysis, is the price point of an asset that is experiencing selling pressure. This is an area where an uptrend is considered to be experiencing temporary resistance or a reversal.
What is Resistance Level?
Unlike a support level, a resistance level is the price point at which an asset is expected to experience significant selling pressure. This is an area where an uptrend is considered to be experiencing temporary resistance or a reversal. When the price of an asset reaches this level, there are usually many sellers interested in selling it, resulting in a reversal of the uptrend and the subsequent price drop.
How is the Resistance Level Formed?
You can use resistance levels to identify potential exit points for an asset to sell. If you are holding a certain asset, you can aim to sell it when the price reaches a resistance level. This indicates a potential reversal of the uptrend and a good opportunity to sell at a higher price.
It is important to note that support and resistance levels are unreliable indicators of future price action. Just because an asset has bounced from a certain price level in the past does not necessarily mean it will do so again. These levels could also be broken if there is a significant change in market sentiment or other factors affecting the crypto markets.
