Breakout
Technical Analysis
What it means
When price moves clearly beyond a support or resistance level, often with rising volume. It hints that a new move in the breakout direction has started.
Example
A stock has rejected $100 five times. On the sixth attempt it closes at $102 on twice the normal volume -- that breakout suggests $100 is now support and $110+ is in play.
Mistake beginners make
Beginners chase the breakout candle at the very top, then watch price reverse in a "fakeout." Waiting for a retest of the broken level gives a safer entry and a clear stop.
Related terms
- Pullback — A short move against the trend after a breakout or impulse, before the trend resumes. It o…
- Support — A price level where buying tends to appear and stop a decline. Price has bounced there bef…
- Resistance — A price level where selling tends to appear and stop a rally. Price has stalled there befo…