What is Breakout?
A breakout occurs when the price moves above a resistance level or below a support level with increased volume, signaling the potential start of a new trend.
Breakout Explained
Breakouts are one of the most popular trading setups. The key is confirmation — a breakout on high volume is more trustworthy than one on low volume. False breakouts (or 'fakeouts') are common and are why disciplined traders wait for a candle close above resistance or a retest of the broken level before entering.
Real-World Example
A stock has been trading between $45 and $55 for three weeks. On Monday, it closes at $56.50 on double the average volume. This breakout above $55 resistance signals the stock may be starting a new uptrend. A trader might buy with a stop loss at $54.
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Build Discipline Around Breakout
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