What Is A Resistance Level In A Trading Vehicle?

Are you new to the markets? Are there some technical terms that make you feel lost? Let's try to solve that.

What is a resistance level in a trading vehicle?

A designated price point on a chart (any time frame) above its current price that limits the increase in the desired issue or over a defined time period. The more times a designated level is revisited, the more validity is attached to it.

How do you use a resistance level?

Resistance levels can be used in few different ways. It can be used to exit a long position for a particular issue. It can also be used to initiate a short position, assuming the issue will retreat from its resistance level and allow to cover the short position at a profit.

Finally, when a resistance level is breached, it may provide temporary support as an issue finds a new resistance level and retreats.

PreMarket Prep is a daily trading ideas show hosted by two veteran traders with a focus on technical analysis. You can catch it live every morning from 8-9:30 a.m. ET here, or listen to the podcast on iTunes, Soundcloud, or Stitcher.