Resistance refers to the price level of an asset where the quotes tend to stop increasing and reverse in the opposite direction. The resistance level is characterized by increasing selling power while buyers cut their positions gradually or abruptly. It acts like a ceiling, the area where the upward momentum weakens. 

Resistance forms when the quotes test a specific level above several times and fail to break higher. The more times this level or area is tested, the stronger the resistance level will be. Once the resistance is broken, it becomes the support, and the price moves higher to find another resistance.

Resistance is not an exact level. It is an area where quotes may slightly differ. Anyway, when the price moves into this area, you can expect it to bounce below the zone.

How to Spot Resistance Levels

Traders use various tools to outline the resistance level. Some of the most popular ones include:

• Horizontal lines. The simplest way to picture the resistance level is. You draw a horizontal line through highs and observe where the price may stall and reverse.
• Moving averages. By using a 50 or even a 200 moving average, you can automatically build resistance levels to use in your strategies.