The resistance line, often called a speed line, aids in the identification of stock movements and levels of support and resistance. Resistance lines are technical indicators that equities analysts and investors use to assess a stock’s price trend. They are quite beneficial in anticipating stock price movements and assisting individuals in choosing the proper stock to invest in. Normally, resistance lines are drawn from high to low. They aid in the estimation of resistance and support levels, making them a valuable trading tool. In an uptrend, a resistance line denotes the support region, whereas, in a downturn, a resistance line marks the resistance region. The three lines in the graph below suggest a downturn, and a thorough examination of them will aid in making an informed investing choice.
A resistance area is an approximate level where you would expect prices to pause from. If you believe that the market price is lying below a strong resistance level, you should look for going short in anticipation of a drop.
When you look at a stock price chart, you notice a level it doesn’t break very easily, instead bounces back. Thats a support level. Conversely, you can see price levels which are difficult to cross and stock makes multiple attempts to break through on the upside. That’s resistance level.