Stock market resistance is one of the key pieces in technical analysis and if you know how to operate with this price level you can achieve many successes in all operations in the equity markets. Because at the end of the day it is a price above the current one, where its most relevant characteristic is that the sales force will outperform the purchase. In the short term, the upward momentum may end, and therefore the price will decline, although not with much intensity. While on the contrary, it can also take a bullish momentum of great importance.
In any case, it is very important to know how to operate on this price level for the success of the operation to be in the end more a reality than a wish. Practically every day the values of Spanish equities overcome resistance and it is a movement that is characterized by being very easy to detect. Even for those small and medium investors who have less experience in this kind of operations. But for you to understand a little better, the resistors is the opposite movement to that represented by the supports. Being the abc of technical analysis to operate with the securities of the stock market.
On the other hand, you cannot forget that when the free rise it means that there are no longer resistances ahead. In other words, it is the best scenario for small and medium investors because of the very high revaluation potential, with practically no limitations or restrictions. Among other reasons because they no longer have to think about resistance ahead. However, this figure is somewhat exceptional in the sense that it does not develop with any regularity. If not, on the contrary, it occurs in a timely manner so as not to appear later.
Resistors: how to operate?
When a price level of these characteristics is surpassed, the best investment strategy that you can develop is to open positions in the affected security. Not in vain, you will have many possibilities that you can make profitable savings with greater guarantees of success. So that in this way, you are in a position to expand your earnings in equity markets. In a simple way and that is in the hands of all retail investors. Because it does not require special learning or financial knowledge of special relevance. This is an aspect that you must assume from these precise moments.
While on the other hand, resistance in the stock market is an important parameter so that you can carry out your most basic investment strategies. Through the entry and exit in the values depending on the supports and resistances. Something so simple that it is available to all users and much more to those who provide less experience in financial operations. As well as the great reliability of these movements, which are trusted by the most relevant financial analysts. And that they use them frequently in their investment recommendations.
On an upward trend
Resistance in an upward trend is the most common scenario in its appearance. In this sense, it cannot be forgotten that resistance temporarily slows progress. After rebounding from support it manages to exceed previous resistance, reaching a new high. This is the mechanism in which this technical figure moves, which is very followed by small and medium investors. In any case, its link with the bearish processes in the equity markets are rather null from any kind of investment strategy.
Another aspect that must be assessed in this matter is that which has to do with the fact that it is part of an upward process. Because in this sense, after having overcome a resistance your next target is the next resistance ahead. With the exception, as we said before, of the free-rise figure where there are no longer any kind of resistances. Absolutely none and all that remains in the end is to go up and up in the price settings. But the free climb is a special training that will be the subject of further explanation in another article.
If this technical figure is not exceeded
On the contrary, in the scenarios in which these price levels are not exceeded in the end, the effects are not the same. That is to say, the actions tend to correct and even to go to the previous support. With a very significant depreciation potential and that require an orderly exit on open positions in the previous days. To the point that there will be time to buy the shares at much more adjusted and suggestive prices. As an investment strategy aimed at improving positions in listed companies and which is a fairly reliable and objective move.
While on the other hand, resistance is violated every day by the securities listed on the equity markets. As you can show in the specialized media. With a wide range of stocks that are present with these special characteristics. As is the case with the breakage of the supports, although in this case for different reasons as is logical to understand by a large part of the small and medium investors. From this point of view, it must be emphasized that this analysis system can be put into practice at any time and in any situation.
Temporary brake on the upside
Another of the most relevant characteristics of resistance resides in the fact that it can stop the rises. But be very careful because this process will only be temporary and for a few trading sessions. For below resume the uptrend which was the origin of its breakage. From this approach, you can give a lot of security to your operations in the stock market so that you can make the money profitable with greater guarantees of success than through other notable investment strategies. Because at the end of the day they are movements that can last a long time. At least enough to increase your personal or family assets.
The fact that with them you are in perfect working condition also has a great impact on this class of figures of technical analysis improve your positioning in equity markets. In this sense, an excellent method to enter the financial markets is to take advantage of the overcoming of resistance to open positions in the securities affected by this movement. Not surprisingly, the risks that are run are very limited and it is normal for everything to develop successfully. At least as far as the medium term is concerned.
It is also very important that you know how to wait for these movements in stock values to be generated. Without anticipating the purchase position since then you can see yourself in a very compromised situation for your personal interests. To the extent that they can even occur handicaps in your portfolio. Of course, rushing is not good advice to invest in the stock market at any time. Not much less. Better caution and know how to wait for your moment to come and that without a doubt it will emerge when you least expect it.
There are usually many resistances
Another aspect that you should know is that in a stock there is not a single resistance, but on the contrary they are several and successive. With the exception of the free rise figure, which is the most beneficial for small and medium investors. Therefore, they are movements that can be developed a lot during an entire exercise, as you have seen in recent years. In this sense, the best investment strategy is knowing how to wait patiently to try to achieve a greater potential for appreciation than before.
As there are many resistances along the way you will always have a moment to apply this strategy in investment. Because they all develop with the same intensity and are governed by the same parameters. Do not forget it if you want to achieve your objectives in the financial markets since one of the errors on the part of small and medium investors is based on differences in these movements. At the end of the day it is a habit in the strategies of the users themselves and that can generate the odd negative surprise at those times.
Finally, you must confuse these figures with others that are very similar in technical analysis and that can create more than one problem for you from now on. Not surprisingly, if you focus only on the resistances it will be easier to develop any investment method that is viable and above all realistic. Instead of dedicating yourself to using different strategies and that can make it difficult for you to operate in the equity markets. As has happened to investors with less experience in this class of operations.