What does a breakout mean?

A breakout refers to when the price of an asset moves above a resistance area, or moves below a support area. Breakouts indicate the potential for the price to start trending in the breakout direction. For example, a breakout to the upside from a chart pattern could indicate the price will start trending higher.

What chart patterns indicate a breakout?

Certain chart patterns often signal an increased probability of a breakout – here are five patterns to look out for when searching for breakout stocks. A triangle pattern is arguably one of the most notable patterns in trading. Triangles can be bullish or bearish patterns, it just depends on whether the triangle is ascending or descending.

What are the best patterns for trading breakouts?

Head and shoulders is another popular pattern for trading breakouts in the market. It is a pattern that is named because of its resemblance. As the name suggests, the pattern has four key sections: right shoulder, head, left shoulder, and neckline. When it forms, it is usually a sign that a bearish breakout is about to happen.

What are stock breakouts?

Stock breakouts are an essential tool for technical trend traders, helping them to spot when price action might be on the cards. But how do they work, and how do you identify breakout stocks? What are breakout stocks? Breakout stocks are shares that move beyond their support or resistance level.