A resistance line is used in technical analysis to determine a price level through which an asset is unlikely to pass. Using lines of support and resistance allows investors to assess whether an asset is near the top or bottom of its short-term trend. Resistance lines can be drawn at any price point which the asset has touched several times, but not passed for a given length of time.
In a long position, a resistance line shows the highest price the asset should fall to and in a short position it shows the lowest price it should rise to.
A basic trading strategy is to buy at levels of support and sell at levels of resistance
- Moving Average (MA)
- Moving Average Convergence Divergence (MACD)
- Support Line
- Technical Analysis