What is a 'Breakout'
A price movement through an identified level of support or resistance, which is usually followed by heavy volume and increased volatility. Traders will buy the underlying asset when the price breaks above a level of resistance and sell when it breaks below support.
This chart shows a stock that has historically encountered a lot of resistance near $37, but notice how it heads sharply higher following the breakout.
A breakout is the bullish counterpart to a breakdown.
Disclaimer: We all are aware that stocks that breaks beyond their resistance with a high volume is a good indication that the price will go up, but then again buy on your own risk.
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