Barriers and resistance

The Thames Barrier was built to stop London from flooding when the tide is particularly high. It provides resistance to water trying to flow up the Thames estuary.

When looking at price charts, it appears that there are sometimes price levels that provide some sort of resistance to the price rising any further. It can appear difficult for the price to 'get through' the resistance. There is a good example of resistance occurring in the gold chart in the video below. I have been expecting the gold price to rise, but it seems to be 'held down'.

The flip-side to this is that when a price rises through resistance, it does often keep going upwards, and the resistance can turn into 'support' to help stop a price dropping back down. Hence it can be a good 'signal' to buy.  Like all trading 'rules' however, this certainly does not happen all the time!

2017 11 18 weekly asset class review from Andy Trendfollower on Vimeo.


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