What is Breakout?
When a stock's price pushes decisively through a support or resistance level.
Formal Definition
A breakout occurs when price moves beyond an established support or resistance level, often on above-average volume, signaling that the prior trading range has resolved. Traders treat breakouts as entry signals in the breakout's direction, though moves that quickly reverse are termed false breakouts or fakeouts.
In Simple Terms
It is the moment a stock finally punches through a ceiling it kept bumping against, often sparking a fresh run higher. Strong volume makes the move more believable and less likely to fizzle.
Example
A stock stuck below $170 for months that surges to $180 on heavy volume has staged a breakout.