What are breakout stocks?

Breakout stocks are shares that move beyond their support or resistance level. A key concept in technical analysis, breakouts can indicate that a stock is about to make a significant move. If a stock moves beyond its resistance level, it will often go on to make a sustained upward move.

What does a breakout trader look for?

A breakout trader looks for price, a technical indicator, or a data point to move beyond a support or resistance level. A breakout trader can use price, a technical indicator, or fundamentals to prompt them into a breakout trade.

What does a breakout mean in technical analysis?

A key concept in technical analysis, breakouts can indicate that a stock is about to make asignificant move. If a stock moves beyond its resistance level, it will often go on to make a sustained upward move. If it moves past its support level, it may be about to go on a bear run.

How to prepare for a stock breakout?

Instead, one should wait patiently for the stock price to move. Once the breakout occurs on the day the stock price trades outside its support or resistance level, and to be sure that the breakout will hold, one should wait until the closing price to take up the trade as shown below: 3. Set a Reasonable Objective for Breakout Stocks