Breakout (technical analysis)

Term in technical analysis

A breakout is when prices pass through and stay through an area of support or resistance. On the technical analysis chart a break out occurs when price of a stock or commodity exits an area pattern. Oftentimes, a stock or commodity will bounce between the areas of support and resistance and when it breaks through either one of these barriers you can consider the direction that it's heading in a trend. Often the resistance level the price breaks through becomes a new support level, and vice versa. This can be a "Buy" or "Sell" signal depending on which barrier it broke through.[1]

Support and resistance levels are seen as 'stronger' if a stock hits them multiple times. In turn, stocks that break through these 'stronger' barriers are more likely to then go on extended moves. Stocks aren't the only assets to break beyond support and resistance levels. Any market favoured by technical traders can see breakouts - including commodities and forex.

Traders and active investors use breakouts to identify trends in their early stages. They are often followed by price action and renewed volatility, making them a fertile area to find profitable opportunities.

## References

[edit]

1. ^ "Breakout stocks: everything you need to know". IG. Retrieved 2024-02-18.

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Technical analysis

Concepts|

* Breakout
* Dead cat bounce
* Dow theory
* Elliott wave principle
* Market trend

Charts|

* Candlestick
* Renko
* Kagi
* Line
* Open-high-low-close
* Point and figure
* Line break

Patterns|

| Chart|

* Broadening top
* Cup and handle
* Double top and double bottom
* Flag and pennant
* Gap
* Head and shoulders
* Island reversal
* Price channels
* Triangle
* Triple top and triple bottom
* Wedge pattern

|

Candlestick|

| Simple|

* Doji

|

Complex|

* Hikkake pattern
* Morning star
* Three black crows
* Three white soldiers

Point and figure|

* Bull trap
* Bear trap

Indicators|

| Support &
resistance|

* Fibonacci retracement
* Pivot point (PP)

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Trend|

* Average directional index (A.D.X.)
* Commodity channel index (CCI)
* Detrended price oscillator (DPO)
* Know sure thing oscillator (KST)
* Ichimoku Kinkō Hyō
* Moving average convergence/divergence (MACD)
* Mass index
* Moving average (MA)
* Parabolic SAR (SAR)
* Smart money index (SMI)
* Trend line
* Trix
* Vortex indicator (VI)

Momentum|

* Money flow index (MFI)
* Relative strength index (RSI)
* Stochastic oscillator
* True strength index (TSI)
* Ultimate oscillator
* Williams %R (%R)

Volume|

* Accumulation/distribution line
* Ease of movement (EMV)
* Force index (FI)
* Negative volume index (NVI)
* On-balance volume (OBV)
* Put/call ratio (PCR)
* Volume–price trend (VPT)

Volatility|

* Average true range (ATR)
* Bollinger Bands (BB)
* Donchian channel
* Keltner channel
* CBOE Market Volatility Index (VIX)
* Standard deviation (σ)

Breadth|

* Advance–decline line (ADL)
* Arms index (TRIN)
* McClellan oscillator

Other|

* Coppock curve
* Ulcer index

Analysts|

* John Bollinger
* Ned Davis
* Charles Dow
* Ralph Nelson Elliott
* Bob Farrell
* John Murphy
* Mark Hulbert

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