Resistance (stock market chart)

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A resistance is a term used in technical analysis and describes a zone in the price chart of securities , rising when reached, according to the technical analysts courses often learn course corrections. Price zones that can end price declines are known as support zones.

Whether one can actually identify with resistance zones with a probability that goes beyond chance successes and thus make statements about the further price development of a security has not been scientifically proven and is controversial.

If a trend is broken at a resistance zone, this is considered an indication of a possible trend reversal. Conversely, a breakthrough can be interpreted as a trend confirmation.

The reason for this behavior is due to the fact that upon reaching a resistance zone, many traders sell their securities (or in Zones short sellers to close out ) in order to realize gains and wait to see if the zone is breached or enters a trend reversal. This behavior counteracts the direction of movement and can reverse the course direction. If such a zone is breached (sustainably), this is seen as a confirmation of the trend and many market participants buy more (or repurchase their securities when they break through support zones) and thereby accelerate the price increase or slide in the direction of the trend. Zones of resistance can thus act as a self-fulfilling prophecy .

literature

  • John J. Murphy: Technical Analysis of Financial Markets - Fundamentals, Strategies, Methods, Applications . FinanzBook Verlag, Munich 2003, ISBN 978-3-89879-062-8 , pp. 68-77 .