Price Rejection Zone

Definition ∞ A price rejection zone is a specific price range for a digital asset where its value has repeatedly failed to move higher or lower, indicating strong opposing market forces. When the price enters this zone, it typically encounters significant selling pressure if attempting to ascend, or substantial buying pressure if attempting to descend, causing it to reverse direction. This area functions as a reliable indicator of resistance or support, reflecting a temporary equilibrium between supply and demand. Traders often use these zones to anticipate price reversals.
Context ∞ The discussion around a price rejection zone often involves technical analysis, as traders seek to identify these levels and understand the underlying market psychology. A key debate centers on the strength and duration of these zones, and whether they will ultimately be breached by sustained market momentum. Observing a price rejection zone provides critical context for understanding short-term price movements and potential turning points in a digital asset’s trading pattern.