Let me give you a short explanation of resistance first. A resistance is also created by a confluence of psychological factors and is a price where people do not expect to breach on the upside. Resistances are based more on fear and caution. This could be due to past experience or the power of round numbers. For example, Nifty faces resistance at 11,000 as that is the level where most traders get skeptical about its ability to go up further.

Resistance is the price that, historically, a stock has had difficulty breaking above. This is the point where the market considers the price to be really expensive. As a result, resistance is the level at which the supply of the stock tends to get clustered and even the hardcore optimists and the bulls tend to turn a tad cautious at these price levels. As a result, the supply becomes so strong that it stops the price from going any higher. Typically, a strong resistance gets created when the price consistently hits a particular level and keeps falling back and it is this movement that gradually builds fear and caution about the efficacy of the resistance level.