Sindex AIWhat is the Resistance Level?
Resistance is a price zone where sellers have previously taken control and turned the market down. Prior highs are the most common reference: traders who sold there before, and those who bought the earlier top and want to exit at breakeven, create supply when price returns. A resistance rejection strategy shorts the level once price shows it is being turned away.
Crypto markets respect obvious levels partly because so many participants are watching the same charts. Rejection at a prior high can produce a sharp reversal as late longs are forced out. The risk is the opposite outcome, a breakout, which is why the Sindex scanner insists on a bearish candle at the level rather than just proximity.
How the Resistance Level works
The scanner sets resistance at the highest high of the last 50 candles for the chosen timeframe and calculates the current close's distance from it as a percentage. A symbol passes the proximity test when the close is between 0.5 percent above and 1.5 percent below the resistance high.
It then requires the current candle to be bearish, closing below its open. That is the rejection component: price reached the level and sellers pushed it back. The score weights how close the close is to the level together with the size of the bearish body, with a floor of 50, so decisive rejections right at the high rank first.
Fifty candles are required, so the strategy is available from 15m to 1d. On short timeframes the resistance is the high of the last several hours; on 12h and daily charts it reflects weeks of trading and carries more weight.
Rules
Entry rules
- Confirm price is within about 1.5 percent below, or 0.5 percent above, the 50-candle high.
- Require a bearish candle at the level, preferably with a long upper wick.
- Check for confluence with a higher-timeframe resistance, a prior breakdown point, or a round number.
- Short on the close of the rejection candle or on a retest of the level that fails.
- Be cautious if the approach to resistance was on rising volume, which often precedes a breakout rather than a rejection.
Exit rules
- Stop just above the resistance high with a buffer for wicks.
- First target at the midpoint of the recent range; second target at the recent low or at support.
- A close clearly above resistance invalidates the setup.
- If price keeps returning to the level on successive bars, supply is being absorbed and the short should be cut.
Best conditions
- When the higher-timeframe trend is down and the resistance test is a rally into supply.
- When the level has only been tested once or twice.
- When the rejection candle comes with a volume spike, showing active selling.
- On 4h and daily charts where the 50-candle high is a meaningful swing point.
Pitfalls
- Repeated tests of the same resistance usually end in a breakout, not a rejection.
- In a strong uptrend every 50-candle high is quickly replaced by a new one and shorts get squeezed.
- Wicks above resistance that run stops before the reversal are common; a stop set exactly at the high will often be hit.
- Risk reminder: shorting resistance with leverage during a trending market is one of the fastest ways to lose an account; keep size small and stops firm.
Resistance Level FAQ
- How does the scanner define resistance?
- As the highest high of the last 50 candles on the selected timeframe. The signal requires the current close to be within 1.5 percent below to 0.5 percent above that high and the current candle to be bearish.
- What if price breaks above the resistance level?
- A clear close above the level invalidates the short thesis. Many traders then flip to watching for a retest of the old resistance as new support.
- Can resistance rejection be combined with momentum indicators?
- Yes. Pairing it with RSI Overbought or Stochastic Overbought from the Sindex scanner, or building the combination in Algo Forge, adds a momentum filter to the price level.