GBZ Breakout Definition of 'Breakout'A price movement through an...

GBZ Breakout

Definition of '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.

The chart shows GBZ encountered a resistance near 0.048 CENTS but notice how it heads sharply higher ! Now the 0.048 resistance becomes a SUPPORT level.

In practice, a breakout is most commonly used to refer to a situation where the price breaks above a level of resistance and heads higher, rather than breaking below a level of support and heading lower. Once a resistance level is broken, it is regarded as the next level of support when the asset experiences a pullback Most traders use chart patterns and other technical tools such as trendlines to identify possible candidates that are likely to break through a support/resistance level.