Two or more highs that stop at nearly the same price, creating an obvious level where protective stop orders cluster above.
When price fails twice at the same price, that price becomes visible to everyone. Short sellers place stops just above it and breakout traders place buy orders there, so the area above equal highs holds a concentration of buy orders waiting to be triggered.
This is why equal highs so often get taken out with a sharp spike before any sustained move happens in either direction. The cluster of orders is the fuel. See liquidity-sweep for the mechanism and double-top for the classical pattern reading of the same picture.
Do not overfit the idea. Plenty of equal highs simply become durable resistance and price never returns. The presence of resting orders makes a level attractive to trade toward, not a guarantee that it will be breached.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.Support, resistance and the flip. Support is a price where buyers keep stepping in and the fall stops; resistance is a price where sellers keep stepping in and the rise stops. Once price closes above an old ceiling, that same level often acts as the new floor.
Educational only, not advice. Spotted an error? Post in Site Feedback.