Most experienced traders can share stories about how certain price levels tend to stop traders from pushing the worth of an underlying asset during a certain direction. For example, assume that Jim was holding an edge available between March and November which he was expecting the worth of the shares to extend.
Let’s imagine that Jim notices that the worth fails to urge above $39 several times over several months, albeit it’s gotten very on the brink of moving above that level. In this case, traders would call the price level near $39 a level of resistance. As you’ll see from the chart below, resistance levels also are considered a ceiling because these price levels represent areas where a rally runs out of gas.