Technical analysis is perhaps one of the most often applied approaches in the financial markets that analyzes securities based on statistics and data, such as past prices and volume of trading. Investors and traders, with a set of tools and terms, can look deeper at market trends to predict some extent future price movements by these methods of analysis in their investment decisions. One of the most crucial concepts in technical analysis is resistance. Any investor looking to move successfully in financial markets needs to know about resistance, how it works, and its role in market dynamics.
This article takes the reader down the road discussing resistance in technical financial analysis, its importance for investors, and how it might influence decision-making in trading and investing.

1. Price Reversals
Resistance provides the investor with an opportunity to predict when a price may change. When the price of a given asset touches resistance, the chances are high that it will undergo selling pressure and reverse the price. Investors can act, such as taking profits, rebalancing their positions, or even shorting the asset.
2. Determining Entry and Exit Points
Resistance is very important in allowing an investor to know if it's a good time to buy or sell a position. When an asset is approaching a resistance level, the investor will be forced to sell and secure their profits or reduce their exposure. But in case the asset breaks above the resistance level-it is referred to as "breaking out"-then that might be a buying signal as the asset can continue its run.
3. Market Sentiment Insight
This is a proof of the emotion that flows in the market. On failed attempts to break through the resistance level, it shows that the market players cannot pay extra money for the asset and therefore do not trust higher prices. However, on breaking through the resistance level, then it may mean a change in sentiment because buyers are now more aggressive and pushing the price up.
4. Risk Management
Resistance is one of the essential tools for risk management. The levels of resistance help an investor better manage his risks. If the investor knows at which level the asset has the resistance level, he should not be surprised that the price can reverse if he buys an asset at the level of resistance. Good practice is to position stop-loss just below the level of resistance such that, when the price refuses to break up through the resistant level, its loss for a trader is cut short.
5. Price Patterns
Resistance is part of technical price patterns to be understood in many ways. Often in the head-and-shoulders pattern, price makes a rise to the resistance level before reversing. In the double top pattern, price moves to the resistance level twice before falling