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    Resistance Line

    This is when you draw a line joining all the tops of a price pattern together the line is called a resistance line. It is basically the exact opposite of the support; it is a series of highs on a chart where the market continually rejects the price thus not allowing it to go any higher. Many traders would elect to sell when the price reaches this point. Experienced chartists believe that the market likes to test resistance lines more than once and will only look for sell signals after a second or third testing of this line.

    Resistance line is drawn in red and the support line in green.

    The same applies for resistance in that it is a powerful level and one should think seriously about taking profit at this level.

    Breakouts

    We have now established what trend lines are and how to draw them. When one of theses lines is breached is called a breakout. If a breakout occurs on a resistance line many traders will class this as buy signal and act accordingly. If a breakout occurs on a support line many traders will class it as a sell signal an act accordingly.