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Resistance 1

Resistance 1

Resistance 1 (R1) is the first resistance level above the pivot point, calculated from the previous period's price range. It marks a potential area where selling pressure may increase.

Resistance 1 (R1) is the first resistance level calculated from pivot point analysis, representing a potential price ceiling above the central pivot point. When price rises from the pivot, R1 is the first level where selling pressure may emerge to halt the advance. As a widely watched level, R1 often sees increased trading activity and potential reversals.

The calculation:

Resistance 1 (R1) = (2 × Pivot Point) - Previous Low

Example:

Previous High: $55
Previous Low: $45
Previous Close: $50
Pivot Point: ($55 + $45 + $50) / 3 = $50
R1: (2 × $50) - $45 = $55

Why R1 matters:

  • First resistance level: Initial level where rally may stall
  • Widely watched: Many traders monitor and trade around R1
  • Profit target zone: Common target for long positions
  • Breakout level: Break above R1 signals strength toward R2

Interpreting price action at R1:

  • Rejection at R1: Resistance holding; potential short entry
  • Break above R1: Resistance failed; price may test R2
  • Multiple tests: Repeated tests may weaken resistance
  • Volume at R1: High volume increases significance of reaction

Trading applications:

  • Short entries: Sell rejections at R1 with stops above
  • Long targets: Use R1 as profit target for longs from below
  • Breakout trades: Buy when R1 breaks with confirmation
  • Risk management: Place stops just above R1 for shorts

R1 in context:

  • Below pivot: Market bearish; R1 unlikely to be tested
  • Between pivot and R1: Mild bullish; R1 test possible
  • Above R1: Bullish; next target is R2

Combining with other analysis:

  • Confluence: R1 at moving average increases significance
  • Trend filter: Trade R1 breakouts in uptrends, rejections in downtrends
  • Volume confirmation: Watch for volume spike at R1 test
  • Candlestick patterns: Look for reversal patterns at R1

Limitations:

  • Not guaranteed: Resistance can fail, especially in strong uptrends
  • Approximate level: Price may reverse near R1, not exactly at it
  • Context matters: Less effective against strong trends

R1 provides traders with the first objective resistance level for the session. It serves both as a profit target for longs and potential entry for shorts, making it a key level in intraday trading.