<p>Resistance, or resistance level, is a price point on a financial instrument's chart where selling pressure is strong enough to prevent the price from rising further. It's a key concept in technical analysis, used by traders to identify potential price ceilings and make informed decisions.</p>

<h2>How It Works</h2>
<p>Resistance levels are formed by past price action. Here's how:</p>
<ul>
  <li>Price reaches a certain level, let's call it <strong>X</strong>.</li>
  <li>Sellers step in, preventing the price from rising further.</li>
  <li>Price retreats, leaving a high at level <strong>X</strong>.</li>
  <li>In the future, when price approaches level <strong>X</strong> again, traders remember this high and sell, creating resistance.</li>
</ul>
<p>Resistance can be identified using various methods, such as:</p>
<ul>
  <li>Past price highs.</li>
  <li>Pivot points.</li>
  <li>Trendlines and chart patterns.</li>
</ul>

<h2>Why It Matters for Traders</h2>
<p>Understanding resistance levels is crucial for traders as it helps in:</p>
<ul>
  <li><strong>Placing Stop-Loss Orders</strong>: Placing stop-loss orders above resistance levels can help manage risk.</li>
  <li><strong>Identifying Potential Reversal Zones</strong>: Resistance levels often act as support levels in the future, indicating potential price reversals.</li>
  <li><strong>Setting Take-Profit Levels</strong>: If price breaks through resistance, it may continue to rise, allowing traders to set take-profit levels accordingly.</li>
</ul>

<h2>Example</h2>
<p>Let's consider the EUR/USD pair on MetaTrader 5. In the chart below, the price has reached a high of 1.2000, then retreated. When price approaches this level again, it finds resistance, preventing it from rising further. Traders can use this information to place stop-loss orders above 1.2000 or set take-profit levels below it.</p>
<table>
  <tr>
    <td><img src="https://i.imgur.com/7X4j6vM.png" alt="EUR/USD Resistance Level Example" /></td>
  </tr>
</table>

<h2>Key Takeaways</h2>
<ul>
  <li>Resistance levels are price points where selling pressure prevents the price from rising further.</li>
  <li>They are formed by past price action and can be identified using various methods.</li>
  <li>Understanding resistance levels helps traders manage risk, identify potential reversal zones, and set take-profit levels.</li>
</ul>