Breakout

DEFINITION A rise in a security's price above a resistance level (commonly its previous high price) or a drop below a level of support (commonly the former lowest price.) A breakout is taken to signify a continuing move in the same direction. Can be used by technical analysts as a buy or sell indicator.
DESCRIPTION
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A situation in which the price of a security rises above a resistance level. The resistance level is a price above which a security only rarely climbs. This is a highly bullish signal because it indicates the price likely will continue to rise until it finds another resistance level. Or, a situation in which the price of a security falls below a support level. The support level is a price below which a security only rarely drops. This is a highly bearish signal because it indicates the price likely will continue to fall until it finds another support level. The advance of a stock price above a resistance level, or the fall of a stock price below a support level. A breakout, especially one on relatively heavy volume, indicates to technicians that the security is about to make a major price movement in the direction indicated by the breakout. Thus, if a breakout is upward, a major upward price movement can be expected.

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