Idea of Breakout & Breakdown
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.