Overhead

In trading, "overhead" almost always refers to overhead supply or overhead resistance, not the accounting term about business expenses. It describes a price level above the current price where a stock has previously traded a lot, leaving behind a group of traders who bought there and are sitting on losses or break-even positions.

The idea is simple: when a stock rallies up toward a price it visited before, some of the people who bought at that old price are relieved to finally see it again. Many of them sell to get out even, or to cut a smaller loss than they once faced. That wave of selling can slow or stop the rally, which is why traders call it "overhead" — it sits above the market like a ceiling.

The nuance that trips people up is that overhead is not a rule or a guarantee, it's a tendency built from crowd psychology and visible on a chart as a prior high, a congestion zone, or a heavy volume area. Price can and does push through it, especially with strong buying interest or news. Traders watch how a stock behaves as it approaches overhead — does it stall and reverse, or does it plow through on high volume — to judge whether the supply has been absorbed.

Overhead is the mirror image of support, which is a price zone below the market where buyers have previously stepped in. Together they form the basic map many traders use to think about where a stock might slow down or speed up.