Approaching Stock Price Resistance Levels

Explanation

The resistance level is the price range at which technicians expect a substantial increase in the supply of a stock. Technicians believe that after a stock has fallen from some previous higher price level, investors who bought at that higher level will wait for the price to come back up again to unload the stock at their break- even level. The stock must thus approach its resistance level from below, and once it reaches it, the extra selling will result in high volume.