CTFA: Certified Trust and Financial Advisor Exam Answer

D

The concept of "resistance" in the financial market is used to refer to a level where the price of a particular security or asset struggles to move beyond due to persistent selling pressure. The resistance level is usually identified by observing the behavior of the asset's price movements on a price chart over a specific period. Based on this definition, we can deduce that resistance occurs when an asset's price has difficulty surpassing a particular level.

Now let's examine each of the options provided and determine which one of them represents a case where resistance occurs.

Option A: Inability to break below prior high If an asset's price is unable to drop below its prior high, it doesn't represent resistance. Instead, it suggests a level of support where buyers are stepping in to purchase the security, thereby preventing a further price decline.

Option B: Inability to break below prior low This option also doesn't represent resistance because the inability to break below a prior low suggests a level of support where buyers are stepping in, thus preventing the security's price from falling further.

Option C: Inability to repair beyond prior low This option represents a potential case of resistance. When an asset's price has dropped below a prior low and is unable to recover back to that level, it suggests that there is selling pressure in the market that is preventing the asset's price from rising further. This behavior is characteristic of resistance levels, and as such, this option is the correct answer.

Option D: None of these This option is incorrect because option C, as explained above, represents a case where resistance occurs.

In conclusion, resistance occurs when an asset's price struggles to move beyond a particular level due to persistent selling pressure. The correct answer to the question is option C: Inability to repair beyond prior low.