A breakout occurs when the price moves decisively above a resistance level or below a support level, typically accompanied by increased trading volume. Breakouts can signal the beginning of a new trend and are among the most widely traded setups in technical analysis. Traders often wait for a candle close beyond the level and a volume spike to confirm the breakout is genuine. False breakouts, where price briefly pierces a level and then reverses, are a common risk with this approach.
Example
“Bitcoin broke out above the $70,000 resistance level with record volume, triggering a wave of momentum buying that pushed price to $75,000.”