What is a 'Breakout'
A Breakout refers to a security's price movement through a historical resistance level. A breakout typically precedes heavy trading volume and increased volatility.
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BREAKING DOWN 'Breakout'
A Breakout can be an incredibly profitable trading opportunity, so adventurous traders who study market performance over time to identify patterns in resistance levels will often attempt to buy
A breakout simply refers to the point when a market breaks beyond a key support or resistance level. It can be part of a technical pattern such as a channel, a horizontal level or even a trend line.
As price action traders, these breakouts are a critical component. They help us determine where the market is likely to go next.
Most breakouts occur after a period of consolidation. Once the market is ready to continue trending, price breaks through a key barrier, representing an opportunity to buy or sell.
