Resistance

An area, not a line. It is identified from where the market has already turned: prior swing highs, the ceiling of an earlier range, the extreme of a session that was not exceeded. Some areas are derived by formula instead, among them pivot points and retracement levels, and round numbers attract attention for no reason beyond how they are written. Its counterpart below the market is support, and the two are the same idea facing in opposite directions.

The explanation usually offered is orders. Participants who bought higher and want out at their entry, participants who sold there before and would sell again, and protective orders resting above the level all sit in the same place, so supply arrives as price approaches. A second, competing explanation is simpler: enough participants watch the same obvious levels that behaviour clusters there regardless of any resting orders. The two explanations predict much the same thing and are hard to separate with data, which is why both are still in circulation.

Three things trip readers. Resistance is drawn by eye, so a level that fails tends to be redrawn slightly rather than treated as evidence against the method, which makes the practice difficult to test in any strict sense. It has width, so whether a level has broken depends on whether closing prices or intraday extremes are being used, and the two disagree constantly. And the convention that a broken resistance area becomes support afterwards, widely taught as polarity, is a convention: it describes what is often observed and rests on no demonstrated mechanism.