Breakout
A breakout is price moving beyond a range, level or pattern - the start of a new move, or a trap if volume and follow-through are missing.
A breakout is price moving decisively past a range, level or pattern. It is the start of a trend or a trap, and follow-through or a fast retest is what separates the two.
A breakout is when price moves decisively beyond a defined level: a trading range, support or resistance, trendline or chart pattern. Breakouts are where trends begin, but they are also where false moves happen, with price snapping back inside the range. Volume and follow-through distinguish real breakouts from traps: a genuine breakout holds the level and continues; a failed breakout reverses quickly, often catching the traders who chased it.
How It Works
- Price closes or trades beyond a defined level
- Real breakouts hold and continue; failed breakouts snap back
- Volume and momentum confirm participation
Trading Tips
Wait for a retest of the broken level before entering - the highest-odds entries
Failed breakouts are themselves signals, often the more violent move
Low-volume breakouts in quiet sessions are the most likely to fail
Related Terms
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