Who it's for — Anyone trading ranges or key levels. Breakout signals corridor exit — confirm with volume and close, else fakeout risk.
A breakout occurs when price exceeds and holds beyond significant support or resistance. It breaks range equilibrium and may start a new trend.
In simple terms — Price leaves the "corridor". Upside break above resistance; downside break below support.
Why breakouts accelerate
Common mechanisms:
- Stop clusters — Stops beyond the level executed as market orders in break direction
- New entries — Traders waiting for confirmation
- Polarity — Broken level becomes support/resistance on retest
Confirmation vs fakeout
| Criterion | More reliable breakout | Weak signal |
|---|---|---|
| Volume | Spike vs recent average | Declining volume |
| Close | Beyond level on operating TF | Wick beyond, close inside |
| Retest | Broken level holds | Immediate return into range |
Common mistake — Buying first tick above resistance without volume: often fakeout — false break back into range.
Summary
- Alternative: Wait for pullback to broken level.
- Volume: Trading volume.
- Often preceded by: tight range compression.
Bronze path — Module: How price moves. Next: Pullback. Index: Bronze path.