Technical Glossary / Support, Resistance & Price Levels
Dynamic Resistance
Resistance that moves with price, such as a falling moving average or a falling trendline.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
Dynamic resistance is a falling or rising reference that rallies fail at. A declining moving average in a downtrend, a falling VWAP, and a resistance trendline are the common cases. The price that counts tomorrow is lower, or otherwise different, from today's.
How to identify it
Price tagging a moving line from below and turning down, more than once. One touch of a random average is not a property of the market.
Bullish reading
A close above dynamic resistance the trend had respected is the warning that the decline is losing its slope. Confirm with structure. Averages get crossed in chop.
Bearish reading
The rally into a falling average that has capped price is the usual dynamic-resistance short, with risk above the line or above the swing high.
Common mistakes
Stacking five averages and taking a short at whichever one price touches first.
Limitations
Like dynamic support, the line follows. It will not cap a squeeze that has already decided to leave it behind.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.