Idea of Breakout & Breakdown

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Breakout & Breakdown-

An asset/share will move randomly or in manners forming definite shapes (patterns) or it will consolidate (trapped and move) in between Resistance and Support. When the asset breaks the Resistance line and moves upward, it’s said to have a Breakout(moves up). In the same manner, when the asset breaks the Support line and moves downward, it’s said to have a Breakdown(drops down).


Examples-



In the examples above, it is seen that the candles on crossing the resistance line will give Breakout and when the candles cross the Support Line, it gives  Breakdown.

               Note-This Breakout/Breakdown only works in combination with other various factors and proper knowledge which helps to take trades efficiently.



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