Investopedia explains 'Resistance (Resistance Level)'
Resistance and support levels are widely used by experienced traders to formulate trading strategies. For example, if a stock is approaching a very strong resistance level, a trader may prefer to close the position rather than take the risk of a significant decline if the stock uptrend reverses.
On an interesting note, resistance levels can often turn into support areas once they have been breached. In a strong uptrend, investors and traders will embark on a buying spree once a stock conclusively breaks through resistance, sending it sharply higher. But traders and investors who missed the move may wait on the sidelines for a better price. This pent-up demand can become a source of support for the stock as it approaches the earlier resistance level.
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