Breakout
Also called: breakdown, breakouts, pullback, retest
A move above a resistance zone (breakout) or below a support zone (breakdown), best defined by a written rule such as a close a set percentage beyond the zone.
After a breakout, prices often pull back to retest the broken level. Volume can show broad participation but does not make a breakout reliable. Many breakouts fail, so treat each one as a hypothesis with a stated point at which it is wrong.
Learn more in these lessons
- Breakouts, pullbacks and retestsWhat is a breakout, and how should you treat one?
- Price gapsWhy do price gaps happen, and do they always get filled?
- False breakouts and misleading signalsWhy do so many chart signals fail, and how can you tell?
- Continuation patternsWhat are continuation patterns, and what can they tell you?
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