In simple terms
Breakdown means a downside break: price falls below support, the lower edge of a range, or another defined structure. It is the directional opposite of an upside breakout.
The word describes the move through the level. It does not require a crash or a fixed percentage decline.
How it is defined
Before calling a move a breakdown, the level, timeframe, and confirmation rule should be stated: a simple cross, a close below support, a minimum distance, or persistence for several bars. Different rules may classify the same move differently.
If price quickly returns above the level, the breakdown may become a fakeout. When the bearish signal traps sellers or short traders, it may also be called a bear trap. See Breakout for the broader framework.
Limit
A breakdown describes an event; it does not guarantee continuation. Support and resistance are often zones, and the outcome also depends on liquidity, volatility, and chart scale.
Sources
- CME Group, Support and Resistance — describes support, resistance, and breaks while noting that levels are zones rather than guaranteed exact prices.
- CMT Association, P&F Traps: Rules That Define Weakened Bulls & Bears — connects the reversal of a bearish signal with a bear trap and failed break.