How do traders use resistance levels to make trading decisions?

Resistance levels are price points where an asset has historically struggled to rise above. Traders use them to make decisions by selling when price approaches resistance, expecting a pullback. If the price breaks through resistance, traders often buy, viewing it as confirmation of upward momentum. For example, if Bitcoin repeatedly fails to exceed $45,000, that becomes a resistance level. Traders might sell at $44,800 expecting a drop, or buy aggressively if it breaks above $45,000. Resistance levels help traders identify profit-taking opportunities and potential entry points. Combined with support levels (where prices tend to bounce up), resistance levels form the foundation of technical analysis, helping traders predict price movements and manage risk more effectively.