# Price Rejection ⎊ Area ⎊ Greeks.live

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## What is the Observation of Price Rejection?

Price rejection occurs when an asset's price attempts to move beyond a significant support or resistance level but is quickly pushed back, often with increased volume. This observation indicates a strong presence of buyers or sellers at that specific price point, preventing a sustained breakout or breakdown. For example, a cryptocurrency might briefly trade above a key resistance only to close below it, forming a "wick" on a candlestick chart.

## What is the Implication of Price Rejection?

The implication of price rejection is that the previously attempted price movement was unsustainable, and the market is likely to reverse or consolidate. A rejection at resistance suggests strong selling pressure, potentially leading to a decline. Conversely, rejection at support indicates robust buying interest, often preceding an upward move. Derivatives traders interpret these signals as potential turning points for establishing or adjusting directional positions.

## What is the Strategy of Price Rejection?

Traders incorporate price rejection into their strategies to identify high-probability entry or exit points. Upon observing a rejection at a resistance level, a trader might initiate a short position using futures or purchase put options, expecting a downward move. Conversely, a rejection at a support level could prompt a long entry or the sale of out-of-the-money put options. Strict stop-loss orders are essential when trading these reversal patterns.


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## [Exhaustion Patterns](https://term.greeks.live/definition/exhaustion-patterns/)

Technical formations indicating that a trend has lost its strength and is nearing a reversal point. ⎊ Definition

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**Original URL:** https://term.greeks.live/area/price-rejection/