In technical analysis (TA), a breakout happens when the price of an asset moves above a resistance level or below a support level. Breakouts often signal that the price may continue trending in that direction, especially when backed by high trading volume.

Breakouts can occur from ranges, channels, or chart patterns like triangles, flags, wedges, and head-and-shoulders. The longer a pattern develops, the stronger the breakout move can be.

For traders, breakouts can act as buy or sell signals:

• Above resistance – potential long entry.

• Below support – potential short entry.

However, not all breakouts are valid. Sometimes price quickly reverses, creating a fakeout (false breakout). To reduce risk, traders often wait for confirmation, such as a retest of the breakout level on higher timeframes.