When prices are unable to keep rising, indicating a ‘ceiling’ that cancels out trader expectations.

Resistance is a term used in corporate finance to describe situations where the price of an asset is unable to rise beyond a particular point. This point is described as a ceiling for the asset price and it generally comes about on account of strong selling pressure. As a result, price resistance can only be surmounted when there is stronger buying pressure.

Resistance is the reverse price condition of support. In the latter, prices are unable to fall beyond a certain point. Thus, both of these price indicators or conditions give traders an idea of what to expect from the market.

A popular term used in corporate finance to describe the profitability of an investment.

Return on Investment (ROI) is a measure used in corporate finance to explain how profitable it would be to commit to an investment. This measure is really a ratio that suggests that an investor can get back such and such a percentage of their original investment within a specified period. Thus, when faced with multiple investment options, ROI can assist the prospective investor in determining the option with the highest expectations of profits.

ROI is simply calculated by dividing net profit by net cost and multiplying the outcome by 100 to render the ratio in percentage. Moreover, ROI is an absolute measure, so an investment that renders 46% ROI is considered to be twice as profitable as one that renders 23%.

An indicator used to determine market movements and identify pricing conditions.

Relative Strength Index (RSI) is a technical indicator that is used to measure the movements of asset prices, and determine whether market conditions are overbought or oversold. Market analysts use this index along with a number of others to observe price movements graphically, after which they can now decide to measure market conditions on a scale of 0 to 100. The closer to 0 the conditions are, the more likely they are oversold. By the same token, the closer to 100 the conditions are, the more likely they are to be overbought.

RSI is a simple index and so it is very popular. Moreover, even though it is not the most practical technical indicator, its accuracy can be boosted when combined with others.

Resistance

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